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Merkel - The Triumph of Ideology over Reality

At a key point in 2008, when the Bush Administration considered its options for resolving the crisis as Lehman Brothers was going down, ideology ultimately trumped reality. The ideology was free markets, without the taint of government intervention.

A chastened Bush, shortly thereafter, stated that his advisors had informed him of a new phenomenon, called interconnectedness. That was the reality.

Now as the Eurozone teeters and totters from one proposed solution to the next, there is one constant - the ideology of fiscal rectitude, with inflation as the Great Satan. Germany has never made a psycological recovery from the inflation of the Weimar Republic. This ideology may very well plunge Europe into a devastating recession, fueled by deflation and austerity. 

Yet once more, ideology triumphs over reality. 

Of course, there is another ideologue running loose. That would be Ben Bernanke, head of Fed. His ideology holds that deflation is the Great Satan, to be defeated by a rightous outpouring of liqidity. Paul Krugman chants his amen from the choir loft. 

It would be really, really nice if some of those who lead us would develop a reality orientation.