Stock market jitters and the Mexican Wave

Fuelled by fears of a worldwide stock market meltdown, shares continued their rollercoaster ride in the City last week, so much so that at one point the London Stock Exchange's website seized up, shuffled off this mortal coil and joined the choir invisible, ceasing to register price movements altogether.

In this era of up-to-the-second communications, stock market sentiment sweeps round the globe like a Mexican wave at a rather dull sporting event. The current jitters relate to the levels of debt being accumulated by a variety of parties, from private households to banks to companies from a wide-range of sectors.

Banks - or "the sheep", as one analyst describes them, given their predilection for following one another - have finally cottoned onto the fact that lending costs have to rise. In some cases lending itself is being cut back. Things have got pretty bad when KKR, one of the world's largest private equity groups, suggests it might have trouble finding financing for its proposed leveraged buyouts, worth around £60bn.

This is not small beer we're talking about here, but what has it got to do with UK pubcos? Well, the squeeze means much-loved refinancing deals may have to be reined in, or postponed, as in the proposed property joint venture between Mitchells & Butlers and Robert Tchenguiz's R20.

In some cases the inability to refinance could prove fatal for a business. Not that this will affect the big pub guys, perhaps, but it will still be an inconvenience and if the monetary plug remains pulled for some time it would be a worrying development.

Still, thanks to a food-price war among supermarkets at least inflation has fallen and the risk of an interest rate hike has been reduced. For now…

Meanwhile I'm packing my copy of Ritchie Blackmore's biography and heading off for two weeks holiday. I hope that what remains of the British "summer" treats you well. See you in September.