The darkness is spreading across Europe and the moment of truth is approaching. The development has gone so far that, at the time of writing (December 1), it has become increasingly clear that unless the European leaders come up with a reasonable solution within a few weeks there is great risk of a euro zone break-up. This fragmentation would threaten the European cooperation, involve a rapid and deep global recession and push the global banking system towards a collapse.

The debt crisis is based on structural economic imbalances within the euro area that has been around since the beginning. The development, however, had not had to go so far as it has. When aggregating the euro area net lending, the conditions look much better than for both Japan and the U.S. - countries which have a much higher standing on the financial markets.

Although population growth in Europe is weak, the euro area has among the world's highest per capita GDP, a large number of competitive firms, world-class universities and stable institutions.

In fact, both the problem and the solution to the debt crisis are political. The credit market is a trust business, and when politicians last year broke the EU Treaty's "no bail-out" rule, an important foundation for a functioning credit market disappeared. Furthermore, when politicians this autumn negotiated government debt write-off for Greece without triggering any Credit Defaut Swaps confidence was further shaken. The contagion, which politicians desperately tried to limit, instead rapidly spread throughout the euro area.

Clear and predictable rules are critical for confidence on the credit market. When politicians need to intervene in the market, it is essential that this happens quickly and with overwhelming force. The European politicians' actions to date have instead been undersized and late.

Despite the dark outlook, we at Newsec maintain our macro-economic scenario. We assume that European politicians will take responsibility and make the right decision - in the short term to stem the immediate crisis and in the long run to solve the structural problems in the euro area.

Global growth will be weak for a prolonged period, with low interest rates and low inflation, but that is normal during the decade after a financial crisis. Sweden has good fundamentals and we stand out from the rest of the world with our low debt, competitive export industry and high savings rate.

Still, the Swedish economy is a small, open economy and it is through foreign trade and the global credit market that we will be affected by the coming recession. However, our strong fundamentals mean that domestic demand in the long run becomes an increasingly important growth engine.

The real estate market follows the overall economy, and investors have to find the segments that are clearly linked to domestic demand. We are facing a severe global credit crunch and the Swedish banks will become increasingly more restrictive in their lending. For large, financially strong investors, this is a competitive advantage, while smaller players will find it more difficult to obtain adequate financing. It is possible to make good real estate transactions in all market conditions but when the economic situation is as turbulent as it is now, is more important than ever to base decisions on a thorough analysis.