Excellent post on Bright Green 'People economics: against the European austerity doctrine'. My quick comments on the back of reading it below:
Austerity driven responses to the financial mess is nothing short of simply 'displacing' private loses into public debt. What we're witnessing is a socialism of the rich - we're seeing the 'socialisation of risk' (through this displacement, now copper fastened by the European Commission's decision as you indicate in your post. But we're not seeing the socialisation of profit or benefit - that's still privatised! The transformation of private/banksters debt into sovereign debt is perhaps the nearest we have seen to a process of political economic alchemy – turning the dross /worthlessness of private losses into a publicly (tax-payer) backed but still privately owned income/capital stream.
This can be most graphically seen in the Irish case of the coalition government in September 2008 being forced with inadequate and partial information and the deliberate manipulation by the main banks operating in Ireland (which deliver revenue to banks and bondholders in Germany and the UK and elsewhere), to issue the bank guarantee scheme. The latter was the legal instrument by which the alchemy worked – transforming privately held debt into public, tax-payer backed debt, and kicked off the austerity drive in Ireland.
Another good analysis of the financial crisis in the Eurozone can be found here European Monetary Union: Muddling Through, Falling Apart, Going Where?