Does the german government automatically monitor/ account for wire transfers from foreign banks (ie bitstamp/mtgox, etc) to german accounts?
No, the german government does not monitor, exept they have a person under investigation because of suspicion of crime.
There are laws against money laundering that make the banks report money transfers over certain limits to the customs or the tax offices.
The daily limit triggering a bank to report is 15000 EUR. Then the bank client has to declare.
For example cash money in your pockets at the airport has to be declared up from 10000 EUR.
Do you have to disclose your bitcoin holdings to the government? If not, to what extent should one be worried about the government monitoring fiat that appears "out of thin air"?
No, as of today. The bitcoin currency is not yet in perception by law and government.
So if over the limit of 15000 EUR in one sum to the recieving bank account, the receiver can declare to have a trade with one of the mentioned ecurrency trade markets, the sum as a result of a contract between the client and the trade market.
If the deals get too huge, you really better buy yourself an island in the caribbean for example.