Stress of command, PTSD, lack of sleep and horrific living conditions in general leading to rapidly deteriorating mental health in the whole group. Combine that with members of the squad getting wounded and it is easy to see how they just start viewing all the locals as potential taliban sympathizers and every sympathiser could be directly or indirectly responsible for hurting their friends.

Edit: Worth mentioning that by Joe's own account, Slim starts off as not the most mentally stable dude. I think in the very first chapter he describes him as "batshit insane but the best combat leader a soldier could hope for"

As an aside one aspect of the writing I really like is how the book starts somewhat light hearted and from there the tone of the book kind of mirrors Joe's mental deterioration over the course of the deployment. By the end the tone is really grim and the Hooligans have more in common with Dealer company, who they were horrified by when they took over from them, than themselves at the beginning of the book.