The addict maximizes present utility by discounting the future. The explanation is valid when we see how the ancient Squamish who never used a refrigerator will not have a need for it, while a refrigerator owner might decide she needs a freezer also. Japan is weakening. The Russian ruble took the worst devaluation in years. The mighty U.S. economy, after a long period of sustained economic expansion, may not be able to continue its upward trend as the rest of the world falls.
Warnings abound daily in the international media about an impending crisis.
The Economist's September 5th cover quite bluntly displays a global meltdown. The magazine even goes a step further by hinting at the possibility of a decline in total global output for the first time in six decades, if present trends continue. Much of the 90's optimism for the so called 'emerging markets' of eastern Europe, Asia and Latin America is fading. J.P Morgan estimates that net capital inflows to these economies rose to under 300 billion dollars in 1995, but has been dropping sharply every year since then. Clearly, the future appears perilous.