In one of the most turbulent weeks in the financial markets this year, there have been not only tears but also laughter as black humour have helped some of the world's biggest banks and institutions come to terms with the prospect of huge losses.

As the FTSE 100 shed 4.1 per cent on Thursday – the biggest daily loss in more than four years – traders let rip with expletives and gallows humour in equal proportions as they grappled with the unprecedented volatility.

One joke likened the crisis in subprime assets – responsible for triggering the implosion of some hedge funds as they totted up billions of dollars in losses – to the Titanic disaster: as with the Titanic, the downside was not immediately apparent and only a few wealthy people got out in time.

Another dealer announced in a cheeky e-mail the creation of a new structured product: a Constant Obligation Leveraged Originated Structured Oscillating Money Bridged Asset Guarantee, or COLOStOMyBAG. One trader noted on the product – a parody of the increasingly bizarre acronyms that have become commonplace in the world of structured finance – "It's basically full of shit."

Other traders described a new quantitative trading method – one of the complex mathematical models de-signed to profit from pricing inefficiencies in the markets – otherwise known as a "dartboard".

One leading credit strategist said: "If you're a trader who has lost a lot of money, there is a temptation to give up and turn to jokes, even go to the pub. I would agree that, in the money markets in particular where credit lines have just dried up, there has been a real sense of panic. This week has been a bad one. It started on Tuesday when Wall Street saw big losses and it just got worse and worse although yesterday the markets did pep up a bit."

Gary Jenkins, a portfolio manager at Synapse Investment Management, a hedge fund, said: "This has been one incredible week. We have seen markets swing wildly. In the money markets, there has been a real sense of panic. Some people may have turned to jokes to keep their spirits up butothers are really crying.

"There is a palpable sense of fear out there and that's not just judging by the Vix" – the market index that measures implied volatility and is otherwise known as the fear gauge, which hit a five-year high this week. "It's real. There are people out there who are very scared.

"I'm actually quite glad I'm about to go on holiday, although I'm going toYellowstone Park. People keep asking me, 'So why do you want to go there? You can see more bears in the City'."