The German State avoided some of the penalties mainly through being broke, although having it's economy sunk to a level where 1US$ cost 4,200,000,000,000 Marks and people were bartering artworks, jewellery and the like for basic foodstuffs helped drive the ferment leading to the foundation and support for the NSDAP who promised a return to a better lifestyle for everyone - and started to deliver on that. From the point of view of the 1920's & 30's German who was used to seeing their lords and masters still hunting, shooting & fishing, throwing lavish parties for their peers whilst everyone else was forced to scrape a living and borrow heavily, it's easy to see the attraction.
There's a good book on the period, 'When Money Dies'.
"When money dies" is pretty sobering reading for any economic period.
It certainly puts political events in 20s/30s central Europe into context. The hardships and tragedy endured by whole populations seems to have desensitised or even motivated them to the cruelties and pogroms that occurred later.