Combine toasted bread and milk in a large mixing bowl; let stand 1 minute. Add eggs, 1 tablespoon onion, salt, nutmeg, sugar, 1/4 teaspoon pepper, garlic salt, and ground meat; mix well. (Mixture may be refrigerated overnight.)
Shape mixture into 1-inch meatballs. Deep fry in hot oil (350°) for 5 minutes or until golden brown. Drain well.
Place 1 1/2 tablespoons hot oil in a large skillet. Sauté remaining 1 tablespoon onion in oil until tender. Add flour, stirring until smooth. Cook 3 minutes or until flour is lightly browned. Gradually add water and bouillon cubes; cook over medium heat, stirring constantly, until thickened and bubbly. Stir in 1/4 teaspoon pepper and whipping cream. Add meatballs to sauce. Cover and simmer 20 minutes. Serve immediately.