The long-running euro zone crisis continues to perplex many Americans. Some see it as a moral drama: the inevitable comeuppance for a sclerotic, work-shy continent that has been spending beyond its means. Others see it as a failure of leadership: why can’t Angela Merkel and other European politicians come together and fix the problem? Still others don’t get it at all—as evidenced by the confused reaction to the news that Brussels has agreed to bail out Spain’s stricken banks. Last week, in anticipation of such a development, the S. & P. 500 rose by nearly four per cent. But when the markets opened this morning, doubts about the bailout surfaced, and stock prices fell modestly.

With a second election in Greece coming up this weekend, I’m struggling as much as anybody else to keep up with developments. But here is a quick F.A.Q. about the Spanish bailout and its aftermath, starting with today’s action on Wall Street:

Q: Isn’t the market’s reaction simply a consequence of the old trader’s rule: buy on rumor, sell on the news?

A: To be sure, there is some of that. But the sheer complexity of the situation is also playing on investors’ nerves and preventing what Europe desperately needs: some confidence that the policymakers are finally on top of things. With another election in Greece set to take place this weekend, and with many of the details of the Spanish bailout yet to be determined, the markets simply don’t know how to assess the situation. And where there is uncertainty, there is selling. Today, yields on Spanish and Italian government bonds actually rose slightly, which is the opposite of what might have been expected.

Q: Why does Spain even need a bailout? Haven’t governments in Madrid been insisting for years that the country could stand on its own two feet?

A: Yes, they have been saying that, and with some cause. Spain isn’t Greece. Until the financial crisis began, in 2008, it was running a budget surplus. The government had relatively little debt, and the banking system was held up as a model of supervision and rectitude. What did in Spain was the same thing that did in Ireland: the bursting of a big real-estate bubble, which had been fueled by low interest rates set in Frankfurt. As house prices fell and foreclosures mounted, many of Spain’s savings banks, which were big players in the mortgage market, got overwhelmed. Over the past few months, it has become clear that the savings banks can’t raise enough capital to rescue themselves, and the Spanish government can’t afford to do it: its borrowing costs have been rising rapidly, and issuing bonds to finance a bank bailout wasn’t really a practical option. Finally, late last week, Spain asked its euro partners for help.

Q: And Europe reacted pretty rapidly, right?

A: It did. From that perspective, what happened over the weekend was pretty impressive. Rather than hemming and hawing for months, which is the E.U.’s usual M.O., the other governments agreed in a single conference call to extend up to a hundred billion euros (about a hundred and twenty-five billion dollars) in credit to Spain’s banks. That’s actually rather more than many experts think the banks will need. A recent report from the International Monetary Fund put the financing requirement at forty billion euros. But E.U. officials wanted to demonstrate that they are capable of behaving in a decisive manner.

“This is a very clear signal to the markets, to the public, that the euro zone is ready to take determined action,” Olli Rehn, the E.U.’s commissioner for economic and monetary affairs, said on Sunday. “This is preëmptive action.” Many knowledgeable commentators applauded. On his blog at FT.com, my old pal Gavyn Davies noted that in providing a way to deal with the Spanish banking crisis, the weekend action “removes one of the key structural weaknesses which has undermined confidence in the Euro for months.”

Q: Where is the money coming from? German taxpayers?

A: No, or not exactly. It is coming from taxpayers throughout the euro zone. In the past couple of years, the Europeans have set up two bailout funds, which are financed by contributions from all members of the union. One of these funds, the European Financial Stability Facility, is already up and running. It provided some of the money for the earlier bailouts. The other fund, the European Stability Mechanism, is set to start operating next month. It’s not clear yet which one of these bodies will provide the money to Spain. That’s one of the things that has spooked the markets a bit: the details of the bailout haven’t yet been nailed down.

Q: Who will get the money? Will it go straight to the Spanish banks?

A: No. The E.U. will extend loans to an agency of the Spanish government that is overseeing the troubled banks, and that agency will distribute the funds as needed. But this structure raises another potential problem. Since the Spanish government will officially be taking on the loans, its overall debts, which have been rising sharply in the past few years, will rise even further—to more than a hundred per cent of G.D.P., according to some calculations. One of the risks of the bailout, therefore, is that it could transform a Spanish banking crisis into a Spanish sovereign-debt crisis. (That is what happened to Ireland.)

Q: So, does this mean that Spain is now officially a bailed-out basket case? Will it be reduced to the status of Greece, Ireland, and Portugal, with outsiders dictating its every move?

A: That’s not quite clear, either. Officially, this isn’t a bailout of the Spanish government. It is a recapitalization of the Spanish banking system by one of the European stability funds. Over the weekend, Spanish Prime Minister Mariano Rajoy insisted that his government had retained full sovereignty and wouldn’t be subjected to outside supervision. But on Monday, this picture got clouded. Wolfgang Schäuble, the German finance minister, and Joaquín Almunia, the E.U.’s competition commissioner, insisted that, as in the earlier bailouts, a “troika” of the International Monetary Fund, the European Commission, and the European Central Bank would oversee the process. “Of course there will be conditions,” Almunia told Spain’s Cadena Ser radio. “Whoever gives money never gives it away for free.”

Q: So what does it all mean? Is the euro crisis any closer to being resolved?

A: Yes it is, but there’s still a long way to go, and the outcome is hard to predict. All along, partly out of sheer contrarianism, I have stood with the minority of commentators who believed that the euro zone wouldn’t break up—that European policymakers would eventually find a way to muddle through. The Greek election and the financial deterioration in Spain have tested this hypothesis, almost to breaking point. The euro can conceivably still survive, with or without Greece, but for this to happen, a number of steps have to be taken urgently.

The first—dealing with the Spanish banking crisis—appears to be in hand. The second is sorting out what’s going to happen in Greece. Assuming the traditional center parties get enough votes this weekend to cobble together some sort of coalition, which is what the latest opinion polls are suggesting will happen, the country will hobble along inside the euro zone for at least a while longer. It will then be up to Merkel and François Hollande, the new French President, to put together, at least in embryonic form, some sort of fiscal union to complement the monetary union.