While the United States turns its back on global gloom for a long holiday weekend, a failed German bond auction has finally brought home to Europeans the realization that nowhere is safe.
"It's as grim as hell. The only good thing is now everyone knows it's as grim as hell," one pale commuter was overheard telling a disheveled-looking colleague on their early-morning Tube ride into London's Canary Wharf financial hub.
Until this week Germany -- Europe's largest economy, with a hard line on austerity -- had been seen as the euro zone's last refuge and a source of comfort for the army of bankers, fund managers and traders caught in Europe's deepest financial crisis since World War Two.
Then came Wednesday's bond auction, in which Berlin found no buyers for almost half of a 6 billion euro 10-year bond offering at a record low 2.0 percent interest rate.
"Yesterday's German bund auction was a clear example that things they thought were on the periphery are now in the core... it's time to do something," said Thomas Becket, chief investment officer at funds firm Psigma Investment Management.
Bond investors have fled, interbank lending is drying up again and questions are being asked about the stability of the region's banking sector: while Americans tuck into turkeys, Europeans are finding life more frightening than festive.
One senior European banker, who declined to be named, said many of his colleagues had been "crisis-deniers" and were given false hope of a rapid return to big bonuses and job security by the significant economic rally in 2009.
"What they are realizing now, and it's even more brutal for them, is that this is in fact the new normal, that the industry is going back to what it was in the early 2000s," the banker said, adding that the recent round of layoffs had cut much deeper than the last, because no bank was hiring.
WORSE THAN LEHMAN?
The quarter following the September 2008 collapse of U.S. investment bank Lehman Brothers has long since served as the benchmark for the lowest ebb of banker morale in living memory, but consensus is quickly shifting.
At a capital markets conference hosted by IFR at the Thomson Reuters' London headquarters on Thursday, bankers and investors exchanged sober greetings like "How are you holding up?" and "are you surviving ok?."
When an attendee expressed surprise at seeing an acquaintance at the event, the fellow delegate drily replied: "It is not like any of us have much to do at the moment."
Depression and stress are sweeping the financial sector, industry sources say, as working weeks gobble up weekends and bankers and traders nervously accept they don't know whether they will still be employed in the New Year.
"You can spend more time on pitching and marketing but sometimes you have to stop and say, 'there is nothing we can do.' And you see people just leave (to go home)," one debt capital markets banker said.
This rock-bottom sentiment can be observed right across the financial sector.
Money men once cynically described as the "Masters of the Universe" are feeling powerless to influence, much less prevent a potential unraveling of Europe's monetary union -- a calamity that would define their generation, possibly even the century.
"You have to think that eventually the penny will drop and they'll have to do something. But...quite sensible people were sitting around in 1914 and saying Europe's not going to tear itself apart over some arch duke being shot by a Serbian fanatic, is it?," said Rob Burgeman, a director at British investment manager Brewin Dolphin.
