The peculiar thing is that this path of fiscal austerity and all the associated economic pain is being chosen not only by countries with obvious repayment difficulties, but all over Europe.
In the midst of a fragile and easily reversible recovery after a very severe recession, governments across Europe - in both deficit and surplus countries - are announcing fiscal austerity packages that are all but guaranteed to prolong recession, or at the very least, damage the prospects of recovery especially in employment.
While the government bond market is the focus of the current crisis, and the talk is all about the possibility of sovereign default, in fact the lending of banks to these countries is dominated by private debt.
Lending to government accounts for less than one-fifth of the total exposure of banks to these countries.
The so-called 'bailouts' that are being provided by the European Central Bank and the IMF to the countries in trouble are in reality bailouts for the banks (mostly from Germany, France, the Netherlands and UK) that have lent to these countries.
It is the unwillingness of finance capital to accept a reduction in the value of these debts that is at the bottom of the current crisis and the current strategy.
This is a strategy that is bound to fail, for the reason explained above.
Image: A protester holds an image of Wells Fargo CEO John Stumpf during a rally down Wall Street to call attention to big bank bailouts and cuts in jobs and education in New York, Thursday, May 12, 2011.