The European Commission has voted to sanction both Spain and Portugal for violating the Union’s budget rules. The Union’s rules dictate that no member’s budget deficit can exceed 3% of its total GDP and both countries have exceeded that limit for several years. Both have been given extra time to cut their budget deficits since the Great Recession of 2008-09, but progress has been sporadic and slow. The decision poses a problem for the Union in light of the recent Brexit vote: harsh penalties might increase euroscepticism in the Union members and precipitate additional moves to leave the Union.
In other European news, some of the Italian and German banks are in serious trouble. Italian banks are struggling with a number of bad loans they have made that have little likelihood of being repaid. Deutsche Bank is also in serious trouble as it failed one of the US Treasury’s stress tests last week and has been labeled by the IMF as the bank most likely to bring down the global financial system. All banks are suffering from the very low interest rates that currently are the international norm. The German government will probably not let Deutsche Bank fail, but the Italian government lacks the economic muscle to rescue its own. Everyone should keep an eye on the banks.
The costs of war can be calculated in a number of ways: by the number of soldiers killed, by the amount of money spent, or by the value of the objectives of the war, to name just a few traditional ways. We rarely think about the lives of the soldiers who have served in a war and what they can accomplish after the war is over for them (if wars are ever “over” for a soldier). The US Department of Veterans Affairs has just released a report which points out that 20 veterans a day commit suicide–the leading cause of death for American veterans. The risk of suicide for veterans is much greater than that for civilians.
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