The CFTC is beginning to think so - after plenty of political pressure, the commission's now taking steps to increase regulation of the energy market.
But how much of the rise in the oil price can really be blamed on speculation?
This Fed letter discusses the outlook and predicts the price settling back to around $70 - certainly below $100 "absent supply disruptions" - it also discusses the impact of the falling dollar and rising inventories.

Yves Smith doubts "the prevailing view that an price increase of nearly 50% in six months in crude oil prices is entirely a function of demand" here.

Calculated Risk throws up its hands and complains about the lack of information coming out of the oil states on their real reserves (or lack thereof).

In a related story, US journalist David Corn goes into the Phil Gramm story in more detail here, linking him not only to the subprime crisis but also to the deregulation of the US energy markets which gave Enron its chance to, er, shine in the 1990s. (His wife, incidentally, went from CFTC to Enron's board.)

The sign of doom in the restaurant business, apparently, is when your suppliers start asking for cash in advance. (According to Anthony Bourdain, anyway.) In that context, the Times has bad news for US airlines:

Sources within the airline industry indicate that credit is being denied to most of the leading American carriers and the practice is moving to Europe and Asia. So uncertain is the cash solvency of the industry that jet fuel suppliers insist on prepayments into special bank accounts...
The need to put up money before delivery of fuel is a huge financial burden that has been shifted from the oil companies to the airlines. According to John Armbrust, a US jet fuel consultant, the oil industry had $5 billion (£2.5 billion) of jet fuel credit outstanding to airlines before the 9/11 terrorist attacks. Now they are demanding that airlines leave cash on deposit.
“The airlines can’t afford it. Traditionally, oil companies extended credit for 14 or 21 days and some as long as 30 days. Now, most American airlines are on prepay. South West is one of a few likely to still get credit."

And via Calculated Risk comes this (not airline-related):

Standard & Poor’s Rating Services said Wednesday evening that it had slashed the ratings of 1,326 Alt-A residential mortgage-backed securities, after recent data is proving performance of Alt-A loans originated in 2006 and 2007 to be particularly problematic. The downgrades affect $33.95 billion in issuance value and affect Alt-A loan pools securitized in the first half of 2007 — roughly 14 percent of S&P’s entire Alt-A universe in that timeframe.

Perhaps more telling were an additional 567 other Alt-A classes put on negative credit watch by the ratings agency.

A review of affected securities by Housing Wire found that all of the classes put on watch for a pending downgrade are currently rated AAA, suggesting that S&P’s confidence in thin overcollateralization typical of most Alt-A deals is quickly waning.

It's not been a good week for UBS.

The Swiss bank's share price has fallen sharply after it warned it could see more mortgage losses.

It's been revealed that its vice-chairman, former US Republican senator Phil Gramm, was simultaneously being paid to lobby Congress about mortgage law and chairing John McCain's election campaign. (This is more of a problem for McCain, whose campaign team now seems to have included a surprisingly large number of lobbyists.)

And it's had to warn its private banking team to stay away from the US or risk being arrested for tax evasion.

And it's still only Wednesday...

...that you discover who's been sweeping things under the carpet. (I will improve on this metaphor when time allows.)
Merrill Lynch has suspended a prop equity derivatives trader in London for being too optimistic with his marks...
Also, the latest report from SG on l'affaire Kerviel - looks as though there may have been an accomplice after all (but not this one). Original document here in three parts.

1. Reggie Middleton provides data on the unprecedented levels of US consumer lending.

2. The Fed warns that almost all loan delinquency rates are now rising rapidly.

Back in November we wrote Credit cards could be source of next debt shock
- looks like that's coming true...

Lots of attention, of course, on the FT's scoop about Moody's credit rating models.

Moody’s awarded incorrect triple-A ratings to billions of dollars worth of a type of complex debt product due to a bug in its computer models, a Financial Times investigation has discovered.

Internal Moody’s documents seen by the FT show that some senior staff within the credit agency knew early in 2007 that products rated the previous year had received top-notch triple A ratings and that, after a computer coding error was corrected, their ratings should have been up to four notches lower.

This Bloomberg piece describes how at least $35 billion in writedowns have escaped notice:

Citigroup Inc. subtracted $2 billion from equity for the declining value of home-loan bonds in its quarterly report to the Securities and Exchange Commission on May 2 without mentioning the deduction in the earnings statement or conference call with investors that followed. ING Groep NV placed 3.6 billion euros ($5.6 billion) of negative valuations in its capital account, while disclosing only an 80 million-euro depletion to income...

Taking losses on a balance sheet instead of an income statement is acceptable under accounting rules, which make a distinction between so-called trading books and long-term investments. Changes in value on the trading side go straight to revenue. Changes in the value of bonds held for the long haul can be marked down on the equity line of a balance sheet, as long as the declines aren't considered permanent.

Four interesting links today-

The Permanent TAF?

Mohammed Yunus on the food crisis

A candidate for the worst security ever issued

And the ineffective oil production increase (back at $127 and still climbing!)

There was once a financial magazine (which shall remain nameless) which published a cover story on the dangers involved in the highly-leveraged balance sheets of various Asian companies. "Tidal wave of debt hits Asia", read the cover, underneath the famous Great Wave off Kanagawa print by Hokusai. The issue reached subscribers shortly after Christmas 2004.

Similarly, I would have thought that, right now, any economist looking for a way to describe the lull in the credit crisis would steer well clear of "eye of the storm" metaphors. Apparently not. On the same day this week -

In the Eye of the Economic Hurricane
Blackstone Chief Calls Credit Recovery "Eye of the Hurricane"

Some of them are proving popular: Fed's Direct Loans to Banks Climb to Record Level

Funds provided through the so-called discount window for banks rose by $2.8 billion to a daily average of $14.4 billion in the week to May 14, the central bank said today in Washington. Separately, the Fed's loans to Wall Street bond dealers rose by $75 million to $16.6 billion.

Some are not: (via Alea) $25 billion offered through the Term Securities Lending Facility, $7.24 billion accepted.

And some are being abused: ECB liquidity scheme fears

The European Central Bank yesterday voiced its "high concern" at growing evidence that banks are exploiting its efforts to unblock the frozen funding markets by using its liquidity scheme to offload more risky assets than it envisaged.
Yves Mersch, a governing council member, said the ECB was now "looking very hard at whether there is not a specific deterioration of collateral" which the central bank is accepting in return for funds...

Hedge funds may be locusts, but the world's financial markets are a monster. (A monster made of locusts?)
Various EU finance ministers (notably not including the UK's Alistair Darling) have also been making noises about curbing executive pay.

The UK banking reform bill will allow banks to hide the fact that they've had to seek support from the Bank of England.

... admits the BBA.

``We have not run away or hidden from the need for reform or the need for review'' of ``serious issues'' in the U.K. financial-services industry, British Bankers' Association Chief Executive Officer Angela Knight said at a hearing of a parliamentary committee in London today.'' The BBA is set to announce the results of its most far-reaching review of the way it sets the London interbank offered rate in a decade on May 30.

MBIA reported its Q1s today. As the FT and Bloomberg both point out, the losses were more than twice what analysts expected - the company actually lost more in Q1 2008 than in the whole of 2007. And the shares are up 7%.
So either everyone who's buying MBIA today is acting irrationally, or none of the analysts who got polled knew what they were talking about. Or both!

A few weeks ago I looked (not entirely seriously) at the issue of anti-speculation legislation, through the story of the 1958 Chicago Onion Ring. It's a live issue again now - Bloomberg reports today that

India, the world's second-largest buyer of vegetable oils, banned futures trading in soybean oil, rubber, chickpeas and potatoes as the government seeks to rein in the fastest inflation since 2005...
Communist allies of Prime Minister Manmohan Singh want to ban futures in cooking oil, sugar and other commodities to tame inflation that reached 7.57 percent last month. While a study found no evidence that halting rice and wheat futures last year curbed prices, the government needs to keep food affordable for the half the 1.1 billion people who live on less than $2 a day.
``Halting futures trading will probably have little impact on Indian inflation,'' Anne Frick, a senior oilseed analyst for Prudential Financial in New York, said in an e-mail. ``World soy- oil prices are up due to fundamental factors, not speculation.''

Just up, the losses at Fannie Mae. Key sentence:

This disclosure will reignite the debate surrounding Fannie Mae's conflicting commitment to its private shareholders and its government mandate to keep the US mortgage market stable, accessible and affordable for homeowners.

Deutsche Bank's Josef Ackermann is the latest investment bank CEO to call the bottom of the crisis:

Well, the Bank of England may be optimistic, but no one else is; the Fed's expanded the TAF (which was welcomed) and loosened the criteria on acceptable collateral for the TSLF.

In the latest Financial Stability Report, the bank sounds rather positive - which certainly explains its relative calmness with regard to the market, compared to its counterparts elsewhere.