Bloomberg details the "shock and awe":
European policy makers unveiled an unprecedented loan package worth nearly $1 trillion and a program of securities purchases as they spearheaded a drive to stop a sovereign-debt crisis that threatened to shatter confidence in the euro. Jolted into action by last week’s slide in the currency to a 14-month low and soaring bond yields in Portugal and Spain, governments of the 16 euro nations agreed to make loans of as much as 750 billion euros ($962 billion) available to countries under attack from speculators.Some of the "unwind" the EU / IMF are trying to "rewind" is detailed in the chart below.
The ECB will also embark on “very significant operations,” European Union Economic and Monetary Commissioner Olli Rehn told reporters in Brussels after the 14-hour meeting. “The ECB has taken a decision to intervene in the secondary markets of government securities.”
Under pressure from the U.S. and Asia to stabilize markets, the European governments gambled that the show of financial force would prevent a sovereign-debt crisis and muffle speculation that the 11-year-old euro might break apart.
The European Central Bank will announce “intervention” in financial markets, Luxembourg Finance Minister Luc Frieden told reporters, without giving further details.
This doesn't address the core issue of too much debt (actually, it adds to it). Rather, this kicks the can down the road and gives peripheral Europe and European banks the time to address their solvency issues (the big concern with sovereign default was the fact that European banks hold a boatload of sovereign debt, thus a Greek default could have triggered a chain of events that I really don't want to think about).
Going forward, these countries will need to deal with the inevitable pain associated with deleveraging and belt tightening. My guess is the pain will prove too much for at least a few of these countries and default / restructuring of debt will happen. At that point my concern is not that the EU is shifting the peripheral countries (Greece, Portugal, Spain) refinancing problems to the broader EU. It is that they are shifting the solvency problems to the EU as well.