I grew up in the north of england in the 60's and I recall the phrase 'youre going loopy' meant you're going crazy. I think it's play on the french word for wolf (Loup)and Loupe de garou (sp?) meant a werewolf. I was always told to be careful of 'loopy people' especially near a full moon. BUT the actions of the song are similar to Hokey Pokey AND I believe both of them are talking about 'St Vitus Dance' or what we today know as Parkinson Disease. My Grandad told me that HIS mother had said the song couldve started after soldiers affected by mustard gas in WWI couldnt control their limbs and they would shake.