Just barely removed from the historic bailout of Greece and the creation of a trillion-dollar European-led financial backstop fund, you'd be dumbfounded if EU countries weren't trying to cut costs.

After all, with most of the PIIGS countries overleveraged and weighed down by stagnant growth, it's about time some of these formerly complacent governments buckled down and embraced fiscal conservatism. Measures such as tax increases, pension reform, and a reduction in social benefits have all been enacted to try to balance budgets and assuage the fears of weary bond investors. It's obviously too soon to tell, but so far, it seems like it could just be working.

As you can see below, markets across Europe have been hit hard by the sovereign debt crisis:

Company

Year-to-Date Return

1-Month Return 

iShares MSCI Germany ETF (NYSE: EWG)

(12%)

3%

ishares MSCI Spain ETF (NYSE: EWP)

(28%)

(1%)

ishares MSCI Italy ETF (NYSE: EWI)

(23%)

2%

ishares MSCI UK ETF (NYSE: EWU)

(11%)

4%

ishares MSCI France ETF (NYSE: EWQ)

(18%)

2%

As I said, we're not too far into the crisis, so we can't rush to any premature conclusions. In addition, Germany, the de-facto leader of the EU, has announced some pretty severe fiscal restraints of its own. Instead of applauding the move, most of its EU neighbors are upset, as they believe surplus nations such as Germany should be promoting domestic consumption and importing more than they currently are. Germany's export-driven economy is perceived to be a drag on other EU nations, and despite calls to the contrary, Germany looks to be content continuing in its frugal ways.

If you have the risk tolerance to invest in Europe right now, Germany is an interesting proposition. As one of the most financially sound nations in the EU, and expected to grow at 1.9% in 2010 according to the OECD, Germany and its exporters seem poised to resume their rally -- that is, if labor and input costs continue to stay low. Siemens (NYSE: SI) and SAP (NYSE: SAP), both of which have strong international businesses, might be great places to start.

What do you think: Is Germany doing the right thing by taking the lead in fiscal severity, or should it be supporting other EU nations by decreasing its dependency on exports? Fire away in the comments section below!

Jordan DiPietro owns no shares mentioned above. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.