Could Austerity measures making Europe's crisis worse?

If an entity improves its credit profile, the interest rate that it pays should fall, right? However, this does not seem to be happening with the Euro nations currently. The Economist points out how despite reducing their deficits, borrowing costs for countries like Germany, France, Spain and Italy have not gone down. This clearly indicates that investors seem to be focusing on short term rather than long term. As austerity is likely to hurt near term economic growth, people who are more interested in making money from speculation, will therefore focus on this near term trend and make their moves. From the economy's point of view however, this move is proving to be counterproductive. This is because an economy which is already under pressure from reduced Government spending will be hurt even more if its cost of financing goes up. Thus, going slow on fiscal tightening and not rushing things would be the way to go we think.