I just finished watching munchausen on Blu-ray, first time i've seen it since it was in the theater, and it's just as wonderful as i remembered (it occurred to me that this story has many similarities with Mary Poppins, which I dearly love, as well). While watching it, I too couldn't help but think of the Bush administration. You don't have to read it literally, as some of the previous posters have suggested, but thematically I believe what Gilliam was demonstrating here is very much relevant in today's politics: government lying to it's people to keep the country in a perpetual state of war. If you listen in the beginning, as Munchausen 1st bursts into the theater and takes stage, declaring "Lies! It's all lies!," if you listen carefully, you'll hear the audience members (symbolizing the city's people) arguing back and forth over the reason their country is at war, and it becomes evident they have no clear idea. However, the scene that seemed most resonant to me was at the end when Muchausen proclaims he will "open the gates!" and Horatio Jackson is desperate that he not do so, because behind the gates is The Truth -- there is no enemy outside... i couldn't help but consider the Bush administration's desperate attempts at hiding the truth from American citizens: disallowing proper media coverage of the war (ie: making sure no photos are printed of dead soldier's caskets returning from war), our reason for being there (which changes from election to election)...
I'm not trying to say that Munchausen is a direct account of American Politics in the last 7 years, but the themes which concern Gilliam in this film (as well as in Brazil) are certainly poiniant in today's political climate, perhaps more so now than even when the film was made.
For those of you who are arguing that the details of Horatio Jackson's story don't perfectly reflect those of George W. Bush, you mustn't be so damned literal. This is a fairy tale, after all, the function of which is often to serve as a cautionary tale, a device which allows us to open our eyes to our own lives and the world around us. To be so literal in your reading is to be as "logical" and myopic as Horatio, and sort of missing very heart of the film.
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