"But then the question becomes, what do you do when countries actually increase spending and debt when the economy is good, and therefore have nothing to spend when the bad times arrive." "So it becomes less a question of economics and more one of politics."

Precisely. And all the western countries have been guilty of this, the only difference is that of degree. Which is why debt has generally only crept up and politics has slowly but surely ceded sovereignty to the banks, especially in Europe where new currency is apparently only created via commercial banks (unlike the US, which just prints it).

"And I imagine that, as Germany gets further integrated with the rest of Europe, that kind of thinking will be weakened."

As far as I can tell that's the current political struggle, especially between the North and South.