As a Nigerian, I like it when the price of crude goes high. After all, my native country gets more that 80% of its foreign earnings from crude. So, anything that makes it to go up is always appreciated.

I have predicted that the price of crude will go up. I stand on it primarily because BP oil spillage just helped me out. Temporary scarcity due to new government maneuvers with the offshore drilling will cause price to spike a bit. Or the psychology of a major regulation will make speculators jack up the price.

However, without the BP oil spill, the short term crude price seems to be going low. Why? The world could experience another dip into recession, making cautious and anxious executives watch their shoulders as they plan to ramp up global production. Sovereign debt is going to play a huge factor in these cyclical economic episodes and global production activity could slow down, again.

Think about it: if the euro continues to go down, some big manufacturing giants like Germany and France could export more and benefit. But there are many euro-zone nations that will not get much help from this.  Few of the nations will dominate the cake that will play out due to weak euro.

Simply, not much has happened in Europe over the long haul. Few of their firms created within the last fifteen years have made it to the top. Contrast that with American Google, Yahoo and possibly Facebook, you will appreciate the structure and pulse of the European economy; it is not that very dynamic in creating new innovations in new industries. It depends largely on the century old industries that power Germany and France, and England.

So what happens in weak euro will not be generally good for all the euro-zone nations with regard to exports as many have largely intra-euro trade. Unlike Germany which trades most with France, but remains #2 exporter in the world after China overtook it early this year; some of the smaller countries do little trade with non-euro nations.

So you get Greece, Spain, Portugal, Italy and Ireland cutting public spending and public wages, you have a problem in the short term in getting euro-zone growing. And this sovereign debt crisis is just beginning. I have predicted that within ten years, a major nation will pull out of the currency union. More problems are coming and euro has a long way to go.

Why? The Europeans are not ready for deep reform.  The labor laws are very anti-competitive and antiquated.  Most of their governments have this mirage that once the PIIGS cut down on deficits, life will be good. As they cut the deficits, the recovery will lag behind, and more pains and riots across the streets in coming months. The creation of a masochistic syndrome that  denies to solve the root cause in Europe which is reform, over the more political convenient fiscal discipline will continue to stall the competitiveness of many of the nations.  While Germany gets it, many do not and they find it hard to compete.

Now, back to African Union.  They are setting good standards for the creation of the single currency. I hope we hold off on it for a long while. But if they follow on with it, they must understand that states play like humans because humans govern states.  Before Spain and Greece made it into euro, they demonstrated clear strategies on reforms to increase productivity, advance labor laws, and competitiveness. Once in, they forgot.

In my talk at the African Union congress last year, I made this case clear: this most be an ongoing benchmark and standardization process if we have to do it. The reason is that many states could come and bring others down with them. Unfortunate for Africa, the big ones are the most fiscally irresponsible. Yes, when you have Nigeria in West Africa acting weird, the small ECOWAS nations are in trouble. In Europe, at least the big nations watch over the small guys, unlike ours.

So what is all this? It is a strange world when solid Europe could be worried. You know Hungary is now in the equation. We are moving from PIIGS to PIIGSH!

But do not worry, all the problems in growth that Europe will cause the world will be offset by gains that Asia powered by China will give the world. Europe has since diminished its shock powers on the world GWP. In the old world, Europe weeps, the world dies; not anymore. In measurable ways, I am confident that people will get used to European problems in the next 15 months as they will be coming.

Things look very irrational these days; you have the oil price going low; a weakening euro; sovereign debts crises;  and yet fairly good earnings  from companies in the latest quarter; and more other things that cannot be easily correlated without unusual assumptions. One of the assumptions being that earnings were good because many firms were restocking inventories, and we should not expect good returns in coming quarters.

You have a system where things become uncorrelated. Exactly what you get when the states are micro-managing the economies and market forces are diminished. Banks declare profits just by taking near zero interests loans from the Federal Reserve and Central Bank of Europe and do nothing creative to the economy. A total disequilibrium and the recoveries continue to recover.

Editor’s Note: originally written in 2010