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On Thanksgiving Thursday, people working in Europe’s financial sector are struggling to find much to be thankful for.
While the US turns its back on global gloom for a long holiday weekend, a failed German bond auction has finally brought home to Europeans the realisation 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 dishevelled-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 eurozone’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 €6bn 10-year bond offering at a record low 2% 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 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.
The quarter following the September 2008 collapse of US 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 yesterday, 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 replied: “It is not like any of us have much to do at the moment.”