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It is probably no longer politically correct to refer to an institution for people with mental health issues as a bughouse, but the "Bughouse Square" nickname for Washington Square Park was an attempt to capture some of the craziness that came with the eccentrics and expressive orators who took park in debates and other public forums the park during the early decades of the last century.  Bughouse was then the slang for what would later generations would refer to as the looney bin or Cuckoo's Nest.