[hueving]

>and large government debt (US anyone?)

The comparison to the US is not apt because the US has control over its own currency. This is critical for high debt scenarios because it leaves the option of essentially printing money via a program like quantitative easing to always ensure interest rates on fed bonds don't get out of control. This serves the purpose of providing favorable rates for the government as well as inflating away the value of the outstanding debt.

Countries bound to the Euro do not have this option so it usually means growth-killing austerity+taxes is the only way out.

[slededit]

Canada solves this among its provinces with equalization payments. Unless you want economic deadzones its the only way to solve the problem.