The world economy has been struggling for several years.
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Economic growth of the industrialized countries seems to be stuck in a very slow growth pattern. Government trade restrictions (both GATT and NAFTA have been sacrificed in an effort to strengthen domestic economies) continue to dampen the business opportunities in the faster growing countries such as China and Thailand. World GDP growth has been stuck in the downward trend begun in the early 90's.
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In the U.S., massive demands stemming from the S&L crisis, federal and state deficits, health care, and other insurance problems have stalled economic growth for a decade. Health care expenses have grown to $1.2 trillion from $ 425 billion in 1985.
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Furthermore, this poor world economy is aggravated by a growing global capital shortage. Constraining factors on the flow of funds have come from:
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Growing U.S. Budget Deficit.
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Tighter banking regulatory and supervisory regimes; more stringent
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Capital requirements resulting from the U.S. Savings and Loan crisis.
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A decrease in cross-border bank activity as banks attempt to maintain domestic client bases.
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Demographic changes constricting savings rates.
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