11/21/07

Among all of the mayhem and madness that is the current financial market crisis, perhaps there is one glimmering light. While virtually every other share has lost pretty much all of the gains they made yesterday, the oil sector has continued to rise and make profit. BG is 2.5% higher at 997p, Royal Dutch Shell is up 1.5% and BP is up 0.5%. The fact that the crisis has not damaged oil shares (yet--who knows, it may strike them eventually) may come as no surprise given the price per barrel, which is nearing $100.

Title of Article: Oil gleams in the gloom
Source: The Guardian
Date: 11/21/07

As oil shares continue to do well, banks and other companies are meanwhile still facing incredible pressure because of the crisis. The stricken mortgage bank Northern Rock has gone down another 14%. While they have received an offer from both Cerberus and JC Flowers, one of the offers was pitched well below yesterday's closing price. Alliance & Leicester, who recently had to dispel rumors about funding problems or a black hole in its accounts, went down another 5%. Buy-to-let lender Paragon, which revealed the scars of the credit crunch yesterday, fell another 25p to 100p. Credit Suisse today cut its price target for the company to 145p from 225p. As the increase in oil shares may have come to no surprise, with all of the above mentioned it may also come as no surprise to hear that the FTSE (Financial Times Stock Exchange) was sitting 90.8 points lower at 6135.7 by mid-morning.

This morning, the Bank of England minutes revealed a 7-2 vote in favor of keeping rates on hold this month. Martin Slaney, head of spread betting at GFT Global Markets, said: "The closeness of the vote suggests rates will be kept on hold for a few more months as the Bank hovers in wait-and-see mode to monitor whether the negative effects of the credit crisis on growth are outweighing inflationary concerns over food and energy prices."

In summation, I could not have put it any better than David Buik at Cantor Index. "Fear, uncertainty, sub-prime lending, credit crisis, downgrading of growth in the US, oil towards $100 a barrel and sentiment shot to ribbons makes a rather toxic and unpalatable cocktail for investors to digest." The fact that one sector of the market is continuing to thrive (oil) means that virtually every other sector is in turmoil on account of the financial market crisis. Investors, among others, are getting nailed, shares are decreasing, people are losing a great amount of money, and, in some cases, companies are going out of business. The crisis has caused a great amount of trouble not only for those in the economic world but also for society as a whole. There's hardly any consumer confidence anymore and, unfortunately, there are no quick and easy resolutions. Getting out of this crisis alive is going to take a lot of time; I've read articles that estimate two to three years until start conditions improve. However long it takes, I'm sure even more problems are going to arise, which will require strategic recovery planning and preventative measures for the future.