The United States has spent more than $3 billion on the military campaign against the Islamic State in Iraq and Syria (ISIS), the Pentagon said in an update Monday.

The U.S. has spent $3.21 billion as of July 15, spokesman Bill Urban said. Since the campaign against ISIS began on Aug. 6, the military operations have cost an average of $9.4 million per day.

A bulk of the money, 53 percent, has been spent on airstrikes, according to the Defense Department. Just under a quarter of the money has been spent on weapons, with the rest spent on missions involving military carriers and other operations.
The average daily cost of the ISIS campaign has risen since September, ticking up to $9.9 million a day after costing around $5.6 million per day in the first few weeks.

The United States began launching airstrikes against ISIS in Iraq last August after the group seized large swaths of territory and began carrying out brutal executions of Americans and other captives.

The military expanded to Syria in September.

The cost of the ISIS fighting crossed the $1 billion mark in December and the $2 billion mark in April.

IMF Report:  “A more centralized approach would facilitate NPL resolution. The SSM [Single Supervisory Mechanism – or centralised Euro area banking authorities] is now responsible for euro area-wide supervisory policy and could take the lead in a more aggressive, top-down strategy that aims to:

• Accelerate NPL resolution. The SSM should strengthen incentives for write-offs or debt restructuring, and coordinate with NCAs to have banks set realistic provisioning and collateral values. Higher capital surcharges or time limits on long-held NPLs would help expedite disposal. For banks with high SME NPLs, the SSM could adopt a “triage” approach by setting targets for NPL resolution and introducing standardized criteria for identifying nonviable firms for quick liquidation and viable ones for restructuring. Banks would also benefit from enhancing their NPL resolution tools and expertise.” So prepare for the national politicians and regulators walking away from any responsibility for the flood of bankruptcies to be unleashed in the poorly performing (high NPL) states, like Cyprus, Greece, Ireland, Italy, Slovenia and Portugal.
• And in order to clear the way for this national responsibility shifting to the anonymous, unaccountable central ‘authority’ of the SSM, the IMF recommends that EU states “Improve insolvency and foreclosure systems. Costly debt enforcement and foreclosure procedures complicate the disposal of impaired assets. To complement tougher supervision, insolvency reforms at the national level to accelerate court procedures and encourage out-of-court workouts would encourage market-led corporate restructuring.”
• There is another way to relieve national politicians from accountability when it comes to dealing with debt: “Jumpstart a market for distressed debt. The lack of a well-functioning market for distressed debt hinders asset disposal. Asset management companies (AMCs) at the national level could support a market for distressed debt by purchasing NPLs and disposing of them quickly. In some cases, a centralized AMC with some public sector involvement may be beneficial to provide economies of scale and facilitate debt restructuring. But such an AMC would need to comply with EU State aid rules (including, importantly, the requirement that AMCs purchase assets at market prices). In situations where markets are limited, a formula-based approach for transfer pricing should be used. European agencies, such as the EIB or EIF, could also provide support through structured finance, securitization, or equity involvement.” In basic terms, this says that we should prioritise debt sales to agencies that have weaker regulatory and consumer protection oversight than banks. Good luck getting vultures to perform cuddly nursing of the borrowers into health.   NPLs

Wolfgang Munchai writes: Whenever you are in a room with European officials and discuss the euro, there is usually somebody who raises his finger and says: “This is all well and good, but it is ‘against the rules’.” It then gets very quiet.

“Against the rules” is a big thing in Europe. Most people do not really know what the rules are. But they do know that rules have to be followed.

Rules of the mind is what we are dealing with in the European debate about the single currency. Many of these rules either do not exist, or they constitute some rather far-fetched interpretation of existing rules.

During the recent Greek crisis, I came across a completely new rule. I first heard it from Wolfgang Schäuble, the German finance minister. It says that countries are not allowed to default inside the eurozone. But a default was perfectly fine once they leave the euro, on the other hand.

I later read that Otmar Issing, the former chief economist of the European Central Bank, used almost exactly the same phrase as Mr Schäuble in an Italian newspaper interview. If so many important people say it, then surely it must be true, mustn’t it?

Actually, as it turns out, there is no such rule. There is only Article 125 of the European Treaty on the Functioning of the European Union. Article 125 says that countries should not take on the debt of other countries. This is also known as the “no-bailout” clause — though that, as it turns out, is a rather loaded interpretation.

In its landmark Pringle ruling — relating to an Irish case in 2012 — the European Court of Justice said bailouts are fine, even under Article 125, as long as the purpose of the bailout is to render the fiscal position of the recipient country sustainable in the long run.

In another landmark ruling, from June this year, the ECJ supported Mario Draghi’s promise to do whatever it takes to help a country subject to a speculative attack.

The ECB president’s pledge had previously been challenged by the German constitutional court. In both cases, the ECJ did not support the predominant German legal interpretation.

So what then can we infer from the previous ECJ rulings in the absence of an explicit ruling from the court on debt relief?

An interesting article by three authors from Bruegel, a European think-tank, concludes that debt relief is almost certainly consistent with current law.

The argument goes as follows: in the Pringle case, the court gave the go-ahead for bailouts in principle as long as they are intended to stabilise public finances. In the ruling on the ECB’s backstop, the court accepted the principle that the ECB could incur a loss on its asset purchases, as long as the bank follows its own mandate.

Add the two together, and you have debt relief. I am not sure whether the ECJ would follow this argument precisely if this ever came to court. The court would probably impose some constraints. But I would be surprised if the ECJ were to follow the German interpretation now when it rejected it previously.

Why do Germany and the ECJ disagree so much? The overt reason is that European law on monetary union is internally inconsistent, and thus open to different interpretation. It neither allows an exit, a default nor a bailout, and has therefore no clear procedure in the event of a financial crisis.

The German view is that the “no bailout” clause is the strongest of them all and must therefore take precedence. Others disagree.

In addition, German constitutional lawyers do not allow economic considerations to enter their legal arguments, while the ECJ justices do. At a deeper level, the disagreement is not about the law, but about politics and economics. The new “no-default” rule is a political aspiration dressed up as legal constraint.

What is really happening is that Germany does not want to grant Greece debt relief for political reasons, and is using European law as a pretext. Likewise, when Mr Schäuble proposes a Greek exit from the euro, ask yourself what rule that is consistent with.

The fact is they are making up the rules as they go along to suit their own political purposes.

The next managing director of the International Monetary Fund (IMF) is likely to come from outside Europe when current leader Christine Lagarde eventually leaves, the deputy head of the Washington-based fund said in an interview broadcast on Saturday.

IMF First Deputy Managing Director David Lipton said the tradition by which a European heads the fund while an American leads the World Bank was coming under pressure and the next appointment would be “strictly merit-based”.

Described on the same radio programme as an “incredible anachronism” by former IMF Chief Economist Kenneth Rogoff, the convention that has ensured that Europeans lead the fund has been increasingly challenged during the euro zone crisis. Lipton said that when Lagarde steps down, her successor would probably come from a non-European country. “With candidates coming forward from around the world, I think it’s much more likely the next time around than it has ever been,” he said. “There are more and more eminently qualified people from outside Europe and the United States and I think the fact that there’s been so much focus on crisis in the United States right at the early stages of the global financial crisis and with Europe, is going to lead to a sense that there has to be a broader pool for the leadership role,” Lipton said.

Lagarde, a former French finance minister, took over as head of the IMF in 2011 after her predecessor, Dominique Strauss-Kahn was forced to resign over a sex scandal. Her five-year term comes to an end next year but she was quoted last month as saying she would consider a second term if she had the support of the IMF’s members. Although there is no formal requirement that the leader of the IMF come from Europe, it has been the practice ever since the institution was set up after World War Two, while the World Bank has always been led by an American.

Next Head of the IMF WIll Probably not come from Europe

Joschka Fischer writes:  During the long night of negotiations over Greece on July 12-13, something fundamental to the European Union cracked. Since then, Europeans have been living in a different kind of EU.

What changed that night was the Germany that Europeans have known since the end of World War II. On the surface, the negotiations were about averting a Greek exit from the eurozone (or “Grexit”) and the dire consequences that would follow for Greece and the monetary union. At a deeper level, however, what was at stake was the role in Europe of its most populous and economically most powerful country.

Germany’s resurgence after World War II, and its re-establishment of the world’s trust (culminating in consent to German re-unification four and a half decades later), was built on sturdy domestic and foreign-policy pillars. At home, a stable democracy based on the rule of law quickly emerged. The economic success of Germany’s welfare state proved a model for Europe. And Germans’ willingness to face up to the Nazis’ crimes, without reservation, sustained a deep-rooted skepticism toward all things military.  Has Germany Changed?

Victor Mallet writes: India’s government has signaled it will remove control of interest rates from the central bank, in a controversial plan that has been attacked by some economists and bankers as a threat to independent monetary policy but welcomed by others as an overdue modernization. The finance ministry proposal is the latest salvo in a long struggle between successive governments and central bank chiefs over the need to boost economic growth on the one hand and the urgency of curbing India’s consistently high inflation on the other. The 188­page draft Indian Financial Code — produced over the past India moves to reduce central bank powers on interest rates for four years by the financial sector legislative reforms commission and modified by the government after public feedback — envisages a seven ­person monetary policy committee, with four members appointed by the central government and three from the Reserve Bank of India. Under the present system, the RBI governor — Raghuram Rajan, the former International Monetary Fund chief economist — is appointed by the government and is ultimately answerable to the finance minister of the day. In practice, however, he controls monetary policy and has veto power over the existing advisory committee of RBI members and outside appointees that sets rates.

Some experts welcomed the draft code, including the provision for an MPC, and said it could even enhance the central bank’s influence over monetary policy given the absolute legal power over the RBI currently enjoyed by the finance ministry.

“Anyone who says the Indian Financial Code is taking power away from the governor is crazy . . . We should absolutely not make a fetish about having a powerful governor,” said Ajay Shah, professor at the National Institute for Public Finance and Policy, the research institution. Prof Shah said the current system was opaque and open to abuse through negotiated deals between the RBI and the finance ministry, and he dismissed as “public relations” the suggestion that Mr Rajan was running a tighter monetary policy than the government wanted.

Mr Rajan, he added, was doing the bidding of Prime Minister Narendra Modi in keeping the rupee strong and conducting the “most intensive exchange rate policy in the past 20 years”.

Under the proposed code, it would remain the responsibility of the RBI to ensure that inflation targets are met, even though central government members would have a majority of the votes on the MPC. “For the RBI to be accountable without having a majority in the MPC could eventually compromise the efficacy and credibility of the central bank, and hence we do not view this as a medium­term positive,” Nomura’s analysts said. Rajeev Malik, senior economist at broker CLSA, called the MPC proposal “disappointing” and said it appeared to reflect insecurity over monetary policy rather than the rumoured bad blood between members of the government and Mr Rajan.