The austerity measures follow the great economic crisis of 2008, in which the debt regime (mainly housing speculative boom) of the western countries, to cover up their offshoring and automation of manufacturing which hollowed out the economy from the inside, finally collapsed.
The comparatively high labor costs in comparison to cheap Chinese or Indian labor make the western workers unattractive to employers, who were now claiming advantage through “free” trade (free for investors, shareholders and corporate executives) to invest in any cheap labor area in the world (incidentally benefiting the nations affected, such as China). Technology raised productivity levels of workers, shed millions of good-paying jobs, and replaced them with McDonalds-type service jobs, to the delight of the employers. The corporations and banks are now flush with cash because of their mega-profits that are lent back to private individuals, who were screwed over as workers (American median wages have declined since the 1970s), and governments (who became important after the crash as lenders of last resort).
Now, the public/private debt burden that the investor/executive class has fabricated by stealing the wealth from regular workers is becoming so large that the same investors become fearful about their debtors, whom they punish by interest hikes that make repayment even more difficult. And the austerity measures make the problems ever larger, because a lack of government investment not only reduces people’s standard of living, but also reduces the productive potential of the society. The growing difference between the productive basis of society and its financial superstructure explains the generation of a new bubble that has to burst after which the bank bailout cycle can repeat itself.
When will it stop? When the people wake up in large numbers and demand political change so loud not even the executives can ignore it. When the executives themselves realize that their crazy capitalism is going too far, and demand change. When the next crash around, the government is incapable of absorbing the costs of another bailout (every crash since the 1970s has become successively bigger), forcing the government to implant debt cancellations.