Europe is borrowing money to bail out countries that got in trouble by borrowing too much money.
Satyajit Das explains that European countries aren’t actually putting their own money into that trillion-dollar bailout fund. Instead, the fund will borrow from investors around the world — the same investors who are growing wary of lending to a bunch of countries in Europe.
What’s more, the fund will be guaranteed by the countries that use the euro. So the more the fund is used, the more countries that are already struggling — countries like Spain and Italy — will be on the hook for potential losses.
