LONDON—This is a bad time to be a purveyor of $1,800 pens. Or a seller of champagne, sports cars or big bouquets of flowers.

Few people feel like splurging in the City, as London’s financial district is known. Instead, it is convulsing from the aftershocks of the crisis on Wall Street.

Thousands of jobs have already been lost, financial institutions have disappeared overnight, rumors swirl—and no one knows where it will end.

After years of economic boom in which City workers became famous for six-figure bonuses, lavish lunches and champagne-fueled parties, the mood has turned somber.

“The City is run by two huge emotions: greed and fear,” said Geraint Anderson, a former banking analyst who chronicled a lifestyle of decadent excess in “Cityboy: Beer and Loathing in the Square Mile.”

“People think the party is over,” he said.

In cafes and pubs, as well as on trading floors, everyone is talking about the crisis that—this week alone—has seen the bankruptcy filing by American investment bank Lehman Brothers, the U.S. government bailout of insurer AIG, and the takeover of foundering British bank HBOS by rival Lloyds TSB.

“People are fearing for their jobs,” said John Allsopp, who works in IT for an American investment bank. “And you just wonder how it got here.”

The financial earthquake that began in the U.S. subprime housing market has shaken economies around the world.

Central banks from the Bank of Japan to the European Central Bank have pumped cash into money markets in a bid to revive interbank lending and stop the crisis of confidence in the world financial system from spiraling out of control.

In Russia, stock exchanges have been closed since Wednesday as authorities try to stem a plummet in share prices. But many Russians—few of whom own stocks—seem convinced by their leaders’ assurances that all will be well.

Ireland is among the hardest hit in Europe. An economy that boomed by wooing hundreds of U.S. companies with low corporate taxes is now on the brink of recession.

“You’d have to go back in history to find things going so badly,” said John Mahoney, 39, a stockbroker taking a smoking break outside his office on Dublin’s riverside. “The Celtic Tiger seems a long time ago.”