There's something appealing about business terminology that reduces complex economic movements to physical actions. The prime example at the moment is the 'credit crunch' - which hopefully will not end up in a global crash. It gives the sense of a natural order which has reached a finite point of disruption. That's so much more comforting than getting your head around the idea that dodgy loans to known credit risks can be traded as assets.

But the term to be considered here is 'squeeze'. It's a term that has recently come into vogue, particularly in Europe, to describe the difficulties in finding finance in a world where Hollywood is awash with capital from the aforementioned private equity boom (there's another of those terms).

The thinking goes there is now so much money that has poured into Hollywood and the bigger US independents that there's a global surplus of studio-backed content with assured distribution. That reduces demand for non-studio content which then struggles to find pre-sales, and downward goes the spiral.

All of which is true but the belief it is a simple squeeze is predicated on the idea that there's a natural balance between studio and independent film outside the US and that the studios have become fat and greedy. On that analysis, Hollywood needs to go on a crash diet.

The counter-argument is that we are not seeing a squeeze so much as a business shift. The market has globalised, television is facing profound change, and disruptive new media and business models are unsettling the business.

In fact, the private equity boom is having beneficial effects outside the US. The money funding the rather healthy studio shooting schedules in many countries has come from hedge funds to the benefit of local industries.

What's more, a Hollywood hungry for international markets has understood that it currently has more money than talent and is looking to back independent and overseas film.

None of that will feel like a boon for the small independent producer in Europe struggling to find finance for a promising project. It's certainly become harder to find the really soft money that allows a producer to get on with what most believe they do best - making movies. As a result, budgets are coming down and prices falling.

The idea of a squeeze suggests there's an imbalance that can be rectified neatly. But here's a tougher argument. Prices are coming down because a significant number of films have been unrealistically budgeted, bloated by easy finance to a level beyond what could possibly fit the market.

Let's get the context straight. There is no natural size of budget, there is only what the market accepts as credible. And investors are demanding more emphasis on matching budgets to audiences, however unscientific such a process may be, and transparency in calculations of both returns and performance. In both cases, film-makers need to engage with the realities of the market.

This is not an argument for a natural free-market order - most countries subscribe to the notion of cultural exception in which certain films are funded as artistically important. It's about engaging with the market as it is.

At the lower end, that means embracing new digital production and distribution. At a higher end, it may well mean accepting that funding will go to companies prepared to work together.

Instead of complaining about the dominance of equity finance, it is worth exploring the possibility of slate financing where indies agree to combine their efforts. This is not US money but money from investors and financial institutions around the world.

There's an appetite for potential high-return investments if the risk can at least be understood. Hit and hope doesn't do it as a pitch, even if there remains an element of that approach in the end.

Surely the best way to beat a squeeze is to beef up.

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