'Don't panic, Captain Mainwaring, don't panic," said Jonesy, in Dad's Army, as he ran around like a headless chicken. That is the general message going around in credit markets.

The current crisis surrounding credit markets is being blamed on the sub-prime mortgage market in the US. Some aspects of the indiscriminate lending in the US have been dubbed "ninja" loans - no income, no job, arrears.

When the loans start to go bad, there is then a scramble to offload debt at a discount to other lenders to reduce liabilities. This offload market has now dried up, leading to a credit crunch.

A glimpse of light in the dark tunnel of despair, however, was the release of UK inflation figures last week. This showed that the rate of inflation had not only fallen from above the Government's two per cent target, but had marginally fallen below. The spectre of further interest rate rises, exacerbating any credit crunch, has therefore diminished.

Cover-light loans have been in abundance over the past few years, as banks compete with each other to make a turn on credit swaps. When everything is rosy, there is a lot of money to be made. It is a bit like pass the parcel, where each wrapper represents a profit, but, when the music stops, what if the ultimate prize turns out not to be as profitable as first thought? This can best be summarised by an old tale that demonstrates how greed can overtake risk considerations.

The story goes that some time in the early years of the 20th Century, there was a lull on the trading floor of the New York Stock Exchange. The lull extended from hours into days, and the boys were getting bored and restless. Come an afternoon, for want of any better entertainment, one of the traders pulled out an elderly sardine tin and announced his willingness to sell this unique item for no more than a nickel. In a moment, two jobbers from the Railroads pitch had bid and counter-bid for the tin, pushing the price up to a dime. Not to be outdone, the swells who trade Texas oil stocks jump in, doubling the price of the sardines, then doubling it again. The tin passes from professional hand to professional hand, with the ticket sometimes a cent or two higher, sometimes up a quarter.

At last, the hubbub attracts the attention of the baby of the floor, a wet-behind-the-ears college kid. He spots the unusual label and can't miss the excitement in the open outcry yelling of the traders. The kid, determined to show he can play with the big boys, and genuinely intrigued by the apparent rarity of the item, firmly calls out "Ten bucks", and is delighted when the bidding comes to an abrupt end. Hefting out his pocket-knife, he punctures the tin, only to be met with the unmistakable stink of rotting fish. Bewildered and heavily out of pocket, the new boy turns to one of his elders and betters, who had taken a half dollar turn out of the tin an hour previously. "I don't get it" says the kid, "these sardines are long gone." "Son," says the old jobber, "those weren't eating sardines, thems were trading sardines."

* Anthony Platts is an assistant director in the Teesside office of Wise Speke, and can be contacted on 01642-608855. Views expressed are the author's own and are not necessarily held throughout the Brewin Dolphin Group. Wise Speke is a division of Brewin Dolphin Securities Ltd, a member of the London Stock Exchange, authorised and regulated by the Financial Services Authority. Prices, values or income may fall against investors' interests. You should be aware that you may get less back than you invested. Investments may not always be suitable for all individuals. If you have any doubts, you should consult a professional advisor.