Looks like what is called puppy impetigo - basically an infection of the skin follicles usually attributed to staphylococcus. Easily treated with oral antibiotics.
Sabra - female GSD - born April 30, 2012
Sargeant - rescued senior GSD male/foster failure - approximately ten years old (August 2013)
Max - rescued GSD - Dec 22, 2010 to March 7, 2012 - at the bridge
Sable - rescued GSD - at the bridge