Can someone please explain this crisis to me ?

I have been reading an article on bbcworld trying to explain the current European crisis and then I came across this statement , which makes it for me even more difficult to understand the any of this mess :


' Indeed, the only reason Italy continues to borrow at all is to meet the principal and interest payments on its existing debts.'


How on Earth does one has to borrow to pay off other debts ? Please Can someone give me a good explanation. I am not good at economics but I would like to understand, and besides it concerns me, since I live here in Europe. Thank you all.|||all that this statement is saying is that italys tax revenue are smaller than itsinterest payments.



dont worry about the calculation of this number its not important, but: if you borrow $1000 and pay 10% intrest per year you must pay about $162 a year in interest (and principle). if your income for the year is only $100, then you cant pay the interest of $162, but what you can do is borrow more money off people, and use that money that your borrowing now to pay the interest on your previous loans (you would have to borrow $62).



of course no bank in its right mind would loan you the money, but governments tend to be able to do this as they're perceived as less risky (make your own mind up about this).



of course you would have to pay more interest eventually on the newly borrowed money, and thats where the problem lies.



italy's income is its tax, so that statement means that italy's tax revenue can not cover the interest payment on its debt. so its borrowing more to pay the interest.



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