Have to disagree with Professor Delong to this extent: When market fundamentalists try to argue that Tulipmainia was not a bubble, they haven't fallen victim to a popular delusion. They are rationally (bounded) trying to defend their ideology against a fatal piece of empirical evidence.
They're the functional equivalent of old-school Maoists trying to argue that the Great Leap Forward was NOT a disastrous failure of a hairbrained scheme, but rather was undermined by a host of preventable mistakes--none of which can be blamed on the Great Helmsman.
On the other hand, maybe Brad is right and ideological rigidity and a refusal to face facts are in themselves a mass behavioral pathology. The Tea Party certainly seems determined to prove it.
Cf. also: @AndyHarless on http://twitter.com