(Mark Lennihan/AP) Scotiabank thinks now is the right time to launch a new credit card.

At least, the company sees no reason to pull back its new NHL-linked piece of plastic, even in the face of all the uncertainty in financial markets.

"It is the start of the hockey season and it's part of our branding strategy," said Frank Switzer, a Scotiabank spokesman.

Indeed, Scotiabank is putting on a push for more than just new credit card clients; the bank is also trying to snag more small-business financing, Switzer said.

Scotiabank 3-month trading As one of Canada's chartered banks pushes the frontiers of its lending business, however, it could find the lending landscape pretty lonely.

September's Wall Street meltdown has led to all kinds of companies reducing, not expanding, their lending. And that, in turn, could lead to a paper crisis — plunging value of stocks, bonds and currency — crimping the real economy and giving Canadians a real pain.

Rate movement

In all the recent pushing-and-pulling in world financial markets, worries about the direction of interest rates — once a paramount concern to economy types — has taken a back seat to credit woes and Congressional vote watching.

Still, how much it costs consumers to borrow money remains an important consideration when they are looking to buy cars, houses or presents for Christmas.

Analysts believe that central banks, such as the Bank of England and the U.S. Federal Reserve, will drop rates in order to encourage spending and thus deal with faltering economic growth.

Across the Atlantic, for instance, investors are already pricing in a 90 per cent chance that the U.K. central bank will cut its much-watched interest rate.

The central bankers, however, operate in the same lending market in which many private institutions are retracting rather than extending credit. Thus, you could wind up with the same number of borrowers fighting over fewer dollars, a classic credit squeeze, and a situation that could drive interest rates in the opposite direction — up.

"That is exactly why there is so much talk about interest rate cuts," said Douglas Porter, an economist with BMO Capital Markets.

Chopping the official lending rate in the short term might counteract somewhat interest rate pressure coming from the shortage of cash in lending markets, he said.

Retailers make a deal

Those companies that are vying for your Christmas dollar are already in the eye of the global financial hurricane.

Retailers were buying products for the yuletide months before anyone knew that Merrill Lynch and Washington Mutual would disappear as corporate entities.

"They have had to make those commitments a long time ago," said Maureen Atkinson, senior partner with the Toronto office of J.C. Williams Group, a prominent retailing consultancy.

Thus, buyers already have various financial instruments in place, such as letters of credit, to pay for inventories.

What remains to be seen, however, is whether shell-shocked consumers will adopt the Santa Claus or Grinch pose in the upcoming holiday season.

So far, Canadian retail sales are showing gains for the year, 4.9 per cent this July compared to the same month last year.

Atkinson, however, is catching hints already that high-end retailers might face a tough season.

"The luxury guys are starting to feel the pinch," she said.

That means Canadians should not keep their buying back in the hope of a big sale at Zellers; hold out for that white gold Bulgari pendant to go on sale instead.

Car crash

Car manufacturers and sellers have been under pressure in Canada and the United States for all of 2008.

Initially, it was environmentally conscious consumers who cut back their purchases of gas-guzzling SUVs. Now, however, the credit crunch is squeezing both ends of the auto market.

On one hand, car companies need gobs of short-term money to pay suppliers and give financing terms to potential auto buyers.

For example, at the end of June, General Motors Corp. had a revolving credit facility worth approximately $5 billion US, in addition to $26 billion in other liquid assets.

At this point, the car giant has not indicated any problems securing short-term financing. But, with its corporate debt rating in the "junk" category under two agencies, General Motors is no longer the solid lending risk it once was.

Financial-related woes are at the same time multiplying at the buying end of the market.

U.S. car sales are down, as much as 33 per cent in case of the Ford Motor Co.

So is dealer financing.

Automotive News, the industry bible, surveyed car sellers and found 60 per cent had problems securing financing for even solid-credit individuals looking to buy a car or truck.

Thus, firms face problems not only getting individuals to kick the tires of their cars and trucks, but also helping them fund the big-ticket buys.

Now these woes are translating into business failures.

Columbus, Georgia-based Bill Heard Enterprises, the United States' largest Chevrolet dealer, went bankrupt in September, causing the loss of 3,200 jobs at various locations.

Grant Thornton LLP said that situation will become more common in the next few months.

The bankruptcy expert said one in five U.S. car dealerships could close its doors within the next 12 months because of the ongoing slump in auto sales and trouble securing short-term financing.

Gimme shelter

At the root of the global credit crunch is the slumping U.S. housing market.

Buyers who could not afford more than a zero per cent interest rate on their mortgages, homes losing value every day and builders committed to putting up new residences and subdivisions all conspired to open up the once-safe haven of real estate to a perfect storm of financial forces.

The result was depressingly predictable.

The widely watched Standard & Poor's/Case-Shiller index of housing prices in 20 U.S. cities fell 16.3 in this July versus July 2007, one of the biggest year-over-year slides ever.

The 20-city measure is down 20 per cent since it peaked in June 2006.

In Canada, the average house price fell 6.5 per cent in August from August 2007.

In addition, there are fewer people willing to jump into the uncertain housing market.

The U.S. Mortgage Bankers Association said the number of mortgage applications dropped 23 per cent in the seven-day period ending Sept. 26, 2008, compared to the previous week.

While Canada does not keep similar figures, the Canadian Association of Mortgage Professionals said the housing sector in this country has not been hammered nearly as badly as have U.S. buyers and sellers.

Canadian home owners shunned zero per cent mortgages and other financial instruments that allow Americans with poor financial circumstances to buy houses, said association president Jim Murphy.

"Canadians are just more conservative when it comes to homes," he said.

Still, the current turmoil in the home market likely means the value of a house, the major financial asset of most Canadians and Americans, will stay low.

The Washington-based National Association of Realtors said total housing inventory — existing houses for sale — in July represented a 10-month supply. The normal level is six months.

End of the job machine

Whether it is retailers discounting for Christmas in October or car dealers staring at empty showroom, all of the industry woes stemming from the financial crisis add up to one thing: fewer jobs.

As companies rein in their businesses because of a lack of customers or of financing, they will certainly not be adding more costs in the form of a larger workforce.

PricewaterhouseCoopers said there were no initial public offerings of new companies' shares in the July-to-September period this year, the first time that has ever happened.

Private firms are not going to public equity markets to raise cash.

And the private markets, venture capitalists and the like, are not much help, either.

"Forget about a new investment. [These funds] won't look at it," said an executive with a smaller company currently negotiating for an infusion of private equity into his business.

Without enough cash, however, these firms cannot grow. Thus, as their businesses stagnate, so do the economic prospects of an awful lot of Canadians.