These are extraordinary times in financial markets. Investors are fleeing to the safe haven of, wait for it, crude oil futures. The crude price hit another new high of $110 yesterday. Meanwhile, the bluest of blue chip financial institutions are viewed as potential plague carriers. The Office of Federal Housing Enterprise Oversight took the unusual step of issuing a statement saying Freddie Mac and Fannie Mae, the state-sponsored mortgage finance giants, had enough capital. Rumours continue to destabilise some of Wall Street's major firms.

Banks remain deeply reluctant to lend in the financial sector. We know only about Carlyle Capital Corporation because it is a publicly listed company. How many other CCCs - leveraged vehicles entirely reliant on the goodwill of short-term lenders - are we unaware of?

Into this maelstrom, five central banks tried to introduce some calm yesterday. The co-ordinated pouring of lubricant into the paralysed cogs and gears in the credit markets may help for a while. But there will be no lasting improvement in sentiment until American house prices - the foundation on which so much of the edifice is built - stop falling.

Into this maelstrom, too, Cadbury Schweppes is attempting to secure debt financing for its demerger.

The financing is 99 per cent there but the banks still have a bit of wriggle room, imposing conditions and exacting a steep price for their support.

Fizzy drinks and chocolate have rubbed along together perfectly well for decades and there should be no great urgency for the separation. There have already been several false starts. Pressing ahead in such pestilential conditions is starting to look more heroic than wise.

patrick.hosking@thetimes.co.uk

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