Must see interview.  Jeremy Grantham, founder of GMO, discusses the mechanics of bubbles, where the next bubbles are forming, why equities are expensive and how Bernanke is repeating the mistakes of Greenspan:

…..watch the video HERE

Price Tag on a Viking Curse

It feels like some ancient shamanic curse has been unleashed on the descendants of the Vikings!

In the 2008-09 banking crisis, the Icelandic government guaranteed huge bail-out loans from Britain and The Netherlands. But the bank failed anyway and so the people were suddenly on the hook for the government’s loan guarantee. On March 8, Iceland held a referendum: taxpayers felt cheated and did not want to honour the government’s guarantee on the defaulted bank’s bad debt. The people overwhelmingly agreed not to pay back the loans to Britain and The Netherlands. Then last week, a giant volcano erupted and spewed ash all over Iceland and Europe! The Norse god Odin must be getting restless.

Imagine how it must feel to be an Icelander. First, it was financial disaster, then a natural disaster. Neither of these two curse-like occurrences will go away soon.

Volcanic eruptions can last for months. And ash is not like snow; it won’t just melt away in the April sunshine. It’s not merely affecting one tiny island nation; Northern Europe has felt the reverberations too. Financial journalists are currently adding up the damages for Iceland’s volcano. Isn’t it interesting how we like to attach economic cost to natural disasters? Haiti’s humanitarian relief efforts all came with a well-publicized price tag. It shows what we think is important in life: how much does it cost?

The effect of bank failures and loan defaults can last for years too. I admire the spunky Icelanders for not accepting their financial fate. In the March 8 referendum, they told the Europeans they would not pay the price of the Bank of Iceland’s folly.

In my book about investing, Beyond the Bull, I comment that, in the financial world, everything is connected to everything else. Iceland is a case in point.

We all realize that volcanoes and earthquakes are connected. They mostly occur on tectonic fault lines around the world. Small earthquakes occur every day. But lately we have been hearing about some really big ones. Haiti, Chile, and China have been hit by huge earthquakes these past few months. And then the volcano in Iceland erupted. Mother Earth is restless.

And now it appears there are financial fault lines in the banking world. It might be more accurate to call them financial default lines. And it looks as though Iceland is sitting right on a financial default line. In fact, their defiant refusal to make good the bad debts of the irresponsible Bank of Iceland might be the triggering force for the next series of financial after-shocks in the banking world.

Greece is currently unable to make payments on her national debt. Some that think Spain, Portugal, Italy, and Ireland are on shaky ground too. Will the taxpayers of those nations follow the example of their Icelandic brothers and sisters? Will they hold referenda too? Will they defy bankers’ rules too? Will it spread to North America? Remember how angry Americans were in early 2009 when the bailed-out banks tried to pay big bonuses to their traders and deal makers? Remember how frustrated they were when the big three auto executives flew to Washington in executive jets to plead for the taxpayers to bail them out? Will Americans follow the lead of Icelanders and refuse to pay for the foolish debts of an obsolete capitalist system?

There are people whose job is to predict earthquakes and financial disasters. What difficult jobs they have! And how futile are their efforts!

Geologists can predict volcanic eruptions as they draw near. They issue warnings to people living in the area that she’s going to blow! Residents have the opportunity to leave. But strangely, some people continue to live at the foot of the volcano, even though they know an eruption is coming. What strange creatures we human beings are. Even though we are warned, we ignore the warnings.

Economists and investment advisors can predict economic disasters as they draw near. But for some reason, they don’t warn the people. Did they warn investors to sell equity mutual funds before the 2008-09 stock market implosion? Did they warn us in the year 2000 to sell our stock portfolios before the high-tech implosion? But strangely, some people continue to follow the advice of those who never sell, even though they know an economic shake-up is coming. What strange creatures we human beings are. Even though they didn’t warn us, we continue to listen to them.

The Viking curse that’s rocking Iceland these days is more widespread than we think. Natural disasters and financial disasters are just normal parts of our lives. The curse is that we pay so little attention to the warnings.

To order your copy of Beyond the Bull and the Five Levels of Investor Consciousness CD, or to sign up for Ken’s free monthly webinar, visit www.gobeyondthebull.com (Bullmanship Code = SS32).

This article and others by Ken are available at http://kennorquay.blogspot.com.
Contact Ken directly at ken@castlemoore.com.

As a general rule, the most successful man in life is the man who has the best information.

Many of the world’s largest mining companies used to have a strong presence in British Columbia—they left in the 1970s after the political landscape changed. Today’s provincial Liberal government has been trying to remake BC into an investable and attractive place for the mining industry to do business again.

“The mining industry is a cornerstone of our provincial economy. Right now there are hundreds of exploration projects underway across BC injecting millions of dollars into communities and creating jobs.” -BC Premier Gordon Campbell, Liberal
Vancouver BC is undoubtedly one of the greatest mining centers in the world, and British Columbia should be a mining powerhouse, consider:

• Excellent geology
• Good transportation system
• Reasonable mining regulations
• Competitive tax rates
• Strategic location with respect to Asian markets. Two modern ports, Vancouver—Canada’s largest and the Port of Prince Rupert, which is the closest of any of North America’s West Coast ports to Asia—up to 58 hours of sailing time shorter
• High-quality and easily accessible geological data
• Mining-friendly provincial government
• Communities receptive to resource extraction as a livelihood
• Attractive exploration incentives
• BC is the third-largest generator of hydro electricity in Canada—one of the lowest power costs in North America. Natural gas is plentiful, cheap and resources are growing
• Some of the most modern education and telecommunications infrastructure in the world

….read much more HERE

There have been billions of dollars in takeovers in the US oilpatch recently, with the most active area by far being the Gulf of Mexico.  Apache Corp (APA-NYSE) made two acquisitions – buying some offshore properties from Devon Energy (DVN-NYSE) for $1 billion, and then spending $3.9 billion for Mariner Energy (ME-NYSE) the next week.

One of the largest independents in the Gulf is ATP Oil & Gas, symbol ATPG:NASDAQ, and with 200 million barrels in reserves, growing production and a new flexible debt facility – no significant repayments until 2015 – position the company well for a major or large intermediate looking for a five year growth engine.

And of course, the question is, if ATP were to get bought out, what kind of price could investors expect? Mariner and ATP are similar enough – both having close to a 50/50 oil gas mix with oil in the Gulf of Mexico and natural gas assets elsewhere – that a rough valuation comparison is possible.

ATP’s new powerpoint shows an 2010 exit rate –how many barrels per day they will be producing on December 31 2010 – of 48,000 bopd (barrels of oil per day production).  They are giving guidance of 7000 bopd on each of the four wells they expect to bring onstream at their Telemark hub in the Gulf of Mexico this year – which I would suggest is at the low end.

(However, management was disconcertingly vague on the actual production of the first one that just was put into production, the AT63 well.  Nor do we know the terms of the new $1.5 billion debt facility.)

It’s good for this team to keep expectations low as they have missed guidance in each of the last quarter, and could miss again when they report Q1.

Analysts put the Mariner purchase in the range of $60,000 per flowing barrel (which means that if you multiply the barrels per day production of the company by $60,000, that will equal the sum total of the market cap of the company plus its debt – called the Enterprise Value – which is the price an acquiring company pays).

So if I want to guess at what I think a fair value for ATP might be at year end, here are a couple ideas: I would use (minimum) $65,000 per flowing barrel, as ATP has a higher oil weighting (65% oil at year end, vs 65% gas for Mariner), and therefore their cash flow would be greater per barrel and deserves a higher price.

Now multiply that by 48,000 bopd of year end production, which equals $3.12 billion.  That is what I believe an acquiring company would pay.  Now to determine what share price that works out to, subtract the $1.5 billion of debt that ATP has, to get $1.62 billion.

Divide that by the roughly 50 million shares to get a per share valuation of $32.40.  An exit rate in 2011 of 65,000 bopd equals $54.50 a share.  That does not take into account any of the $2 billion in infrastructure the company has between its 3 hubs (which is one of those huge offshore oil platforms) – Gomez, Telemark and the still being built Octabuoy, which will be deployed in the North Sea.

I find it odd that very low producing rates but long life onshore production gets valued significantly higher than Gulf of Mexico (GOM) production, but the annual threat of hurricanes, high capital costs and usually short life reserves combine to drive valuations lower.

Another metric is Net Asset Value.  Many producers trade at or near their NAV, but in their powerpoint management shows a current enterprise value (market cap + debt) of $2.1 billion and an NAV of over $7 billion, for a very cheap 30% of NAV.

About Oil & Gas Investments Bulletin

Keith Schaefer, Editor and Publisher of Oil & Gas Investments Bulletin, writes on oil and natural gas markets – and stocks – in a simple, easy to read manner. He uses research reports and trade magazines, interviews industry experts and executives to identify trends in the oil and gas industry – and writes about them in a public blog. He then finds investments that make money based on that information. Company information is shared only with Oil & Gas Investments subscribers in the Bulletin – they see what he’s buying, when he buys it, and why.

The Oil & Gas Investments Bulletin subscription service finds, researches and profiles growing oil and gas companies.  The Oil and Gas Investments Bulletin is a completely independent service, written to build subscriber loyalty. Companies do not pay in any way to be profiled. For more information about the Bulletin or to subscribe, please visit: www.oilandgas-investments.com.

The Great Recession that may have just ended will amount to nothing compared to the next one, says commodities expert Jim Rogers.

The huge fiscal and monetary stimulus is what will cause the crisis, he says. Rogers notes that the United States suffers a recession every four to six years on average.

“When it (the next one) comes, it’s going to be much worse, because Washington can’t quintuple its debt again,” he told Newsmax.TV Money.

Video — Rogers: Next Recession Will Be Much Worse

Federal Reserve Chairman Ben Bernanke is a big part of the problem, says Rogers, chairman of Rogers Holdings. “Mr. Bernanke can’t print much more money again. The world is going to run out of trees.”

Rogers recommends that we abolish the Fed, because it’s causing the problems. “We’ve had three central banks in American history. The first two disappeared. This one will too,” he predicted.

That’s thanks to the mistakes made by Bernanke and his predecessor, Alan Greenspan.

“They’ve taken on gigantic amounts of debt that you and I are now responsible for. The central bank is making it worse,” Rogers said.

Bernanke’s low interest rate policy is a terrible mistake, Rogers says. “He’s essentially ruining the U.S. economy in the long run and ruining the U.S. dollar as well.”

The dollar’s safe for now, Rogers says, noting that he owns it himself. “But in the longer term, the dollar is a terribly flawed currency.”

Inflation already is here, he says.

“We know that prices are going up, whether it’s insurance, entertainment, education or fuel. The price of everything is going up, and it’s going to get worse because Mr. Bernanke and the people in Washington are spending gigantic amounts of money that we don’t have.”

That inflation is reflected in higher oil prices, and the surprise will be how high oil rises over the next decade, Rogers says.

“Known reserves are declining at a steady rate,” he points out. “Unless somebody finds a lot of oil very quickly, the price of oil is going to go much higher.”

Stocks aren’t in imminent danger, Rogers says. “Stocks are doing OK, and probably will for a while, because all this money is being flooded into the economy. It has to go somewhere.”

There’s a very good chance that some governments will default on their debt in the next few years, he says.

While some insist that fate will befall the United States and United Kingdom, Rogers says he doesn’t know enough yet to judge.

“I do know that they’ve run up staggering debts in Washington, and that usually leads to problems down the road.

“Some expert investors have described the market’s reaction to the SEC’s accusations against Goldman Sachs as a ‘storm in a teacup.’ They believe the fallout would be short-lived, and eventually present buying opportunities
However, billionaire investor Jim Rogers, Chairman of Rogers Holdings, feels slightly differently.

“Markets are overdue for a correction,” Rogers told CNBC in a telephone interview Saturday. “Any market that goes up this much, this fast, this steadily without correction – it’s not normal. When that sort of things happens, the market could be setting itself up for a 15 – 20% correction.”

Rogers does not think the Goldman issue itself would cause a correction – it would be more of a catalyst.
“When the markets are ready for a correction, something will come along… the straw that breaks the camel’s back.”

The investment guru did not seem all that surprised by the SEC’s actions, noting that these kind of investigations usually take place after major financial meltdowns (like dotcom).

Borrowing a quote from Warren Buffett, Rogers said “when the tide goes out, you see who’s swimming naked. I’m sure there will be many many more skeletons to come.”

Thoughts of more high profile lawsuits on Wall Street and a pending market correction may send some into a panic, but Rogers said it is important to stay calm.

“What I am doing is watching. If this is going to be the beginning of a correction. we will know how the markets does next week, by Thursday, I suspect. It’s not time to sell in any significant way.”

Goldman Could Trigger Market Correction

“Some expert investors have described the market’s reaction to the SEC’s accusations against Goldman Sachs as a ‘storm in a teacup.’ They believe the fallout would be short-lived, and eventually present buying opportunities
However, billionaire investor Jim Rogers, Chairman of Rogers Holdings, feels slightly differently.

“Markets are overdue for a correction,” Rogers told CNBC in a telephone interview Saturday. “Any market that goes up this much, this fast, this steadily without correction – it’s not normal. When that sort of things happens, the market could be setting itself up for a 15 – 20% correction.”

Rogers does not think the Goldman issue itself would cause a correction – it would be more of a catalyst.
“When the markets are ready for a correction, something will come along… the straw that breaks the camel’s back.”

The investment guru did not seem all that surprised by the SEC’s actions, noting that these kind of investigations usually take place after major financial meltdowns (like dotcom).

Borrowing a quote from Warren Buffett, Rogers said “when the tide goes out, you see who’s swimming naked. I’m sure there will be many many more skeletons to come.”

Thoughts of more high profile lawsuits on Wall Street and a pending market correction may send some into a panic, but Rogers said it is important to stay calm.

“What I am doing is watching. If this is going to be the beginning of a correction. we will know how the markets does next week, by Thursday, I suspect. It’s not time to sell in any significant way.”