Science and markets

I have put a moratorium on investing over the last year, not because of any real changes but because we had met our objectives in investing in--certainly not in return out. I had a call last night from a friend who has been devastated by the market downturn in the last year. I have mixed emotions; I think the gains of the past few years have been imaginary so I don't think the losses are real either but I am concerned how we, or anyone, can make good decisions in this environment. Everyone makes an investment every time he invests or doesn't. A hamburger is an investment. The market has shown that neither the participants nor the regulators have anything other than themselves in mind so decisions are hard. It is a good lesson for the young: Everyone will put themselves first in commerce. And they will smile and lie. I have had people try to solicit money from me in an investment that was long term (five years) when they knew the business was so flawed in would last only a few months longer.
A corollary lies in the problem of investigation and analysis. The mortgage crisis was precipitated partly by the active encouragement by the government of home ownership. The idea was that home owners were better citizens. That may be an association but it may not be a cause and effect. Perhaps saving money so you can afford a home makes better citizens. Maybe renting selects out nasty neighborhoods and hence nasty neighbors you can't escape and who make you a bad citizen. These are hard to tease out but impossible to base policy on. Global warming is another example. This link is interesting but you have to read only the first paragraph to see my concern. http://co2sceptics.com/news.php?id=2575 A very competent scientist is stating she could not, for various reasons, make an honest statement until now. If our scientists have trouble being honest, don't expect a guy with a 2 million dollar mortgage in N.Y. selling options to be. And that is at the core of our society's problems today.