Why do people mine bitcoins when they are losing 20% a month? Why do people continue to mine bitcoins independently of their hash rate if their ROI loses 20% every month at the going difficulty rate and the exchange rate BTC/USD is at best flat?
Most miners are speculating that the future value of a bitcoin will be greater than the present value. No profit-oriented miner is happy about the current rate of increase in difficulty. Also, the current rate of difficulty is not a one-way phenomenon. Many factors could cause the difficulty to decrease, such as a flaw that was perceived to be un-fixable. If confidence in bitcoin in general were to drop, mining difficulty would drop as well as mining power and money fled to other virtual currencies. 

Other people genuinely want to create an alternate payment network and/or currency and see their contribution in those terms, and not in monetary terms. For those people the price of bitcoins is not their primary motivation.