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For the chief executive officer of AT&T, the largest U.S. wireless company, it just isn’t a big deal that American homeowners are getting their phone lines and high-speed Internet disconnected for non-payment in increasing numbers these days. Randall Stephenson told a conference in Phoenix, Ariz., on Tuesday that the home phone and Internet business only accounts for 20 per cent of his revenue anyway. With nearly 66 million wireless subscribers, he expects double-digit earnings growth this year and next.

The market took it a little differently.

Within minutes of Stephenson’s comments about cutting phone service to U.S. homeowners, AT&T shares dropped $4.50, or 10 per cent, to $37.14, recovering to end the session down five per cent at $39.16.

The rest of the U.S. market was not nearly as resilient. After a pleasant morning of trading where the Dow Jones Industrial Average was up 78.93 points at one point, the benchmark plunged 268 points, finishing lower by 238.42, or 1.9 per cent, at 12,589.07. The S&P 500 dropped 25.99, or 1.8 per cent, to 1,390.19, while the Nasdaq composite skidded 58.95, or 2.4 per cent, to 2,440.51. Phone companies in the S&P 500 lost 4.8 per cent of their value, the steepest one-day drop in five years. Verizon, the number-two U.S. phone company, fell 93 cents to $41.99 US.

Homebuilders, mortgage lenders and bond insurers took another big drop after the U.S. realtors association said sales of previously occupied homes dropped 2.6 per cent in November from a year earlier. KB Home fell 9.2 per cent to $16.78 US after writing off big losses in the third quarter. rel=”external nofollow”Lennar dropped 7.3 per cent to $14.62 US. Countrywide, the biggest U.S. mortgage lender, sank $2.17, or 28 per cent, to $5.47, the most since Black Monday in 1987, after denying reports that a bankruptcy filing is imminent pay day advance. MGIC, the biggest mortgage bond insurer, dropped 15 per cent to $16.51. Credit card issuer Capital One fell eight per cent to $43.19 US.

Canadian markets weathered the sell-off better, as U.S. dollar weakness pushed gold to a new record high while other commodities rallied. The S&P/TSX Composite Index finished the session lower by 77.12 points, or 0.6 per cent, at 13,541.75, after rising as much as 152 points earlier in the session. The S&P/TSX Venture composite gained 0.23 of a point to 2,820.21.

The February gold contract reached $884 US an ounce, surpassing the all-time record of $875 US set in January, 1980, before ending the session at $880.30 US, up $18.30, or 2.1 per cent. The February crude oil contract climbed $1.24 to $96.33 a barrel. The Canadian dollar climbed half a cent to finish just under $1 US.

Goldcorp added 73 cents to $38.05, up two per cent. Barrick gained $1.98, or four per cent, to $49.46, a new high. Yamana advanced $1.13, or eight per cent, to $15.50. Alamos Gold added 82 cents, or 14 per cent, to $6.57, after production rose 43 per cent in the third quarter to 31,000 ounces.

Richmond-based CHC Helicopter fell $1.36, or five per cent, to $23.58. Moody’s bond-rating service cut CHC’s credit outlook to “negative” after the company borrowed to add 43 new choppers to its fleet. CHC is the world’s biggest transport provider to offshore oil-drilling platforms. After markets closed, Richmond’s MacDonald Dettwiler announced the sale of its satellite-related defence business to Alliant Techsystems of Minnesota for $1.325 billion, or $32 a share. Shares of MacDonald Dettwiler last traded at $42.51, well off its 52-week high of $53.82.

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Despite 2007 having been one of the worst real estate years in recent memory, some economic forecasters predict improvement in the local financial landscape in 2008.

“Over the next couple of years, the Vallejo area will have one of the largest rates of income growth in Northern California, second only to San Jose,” said University of the Pacific’s business school’s dean, Chuck Williams. “We’re predicting a 5.7 percent income growth rate for your area.”

Most of the income growth will be among business professionals in the education and health sectors, and in transportation and utilities, he said.

The Vallejo area’s wage level ranks seventh of Northern California’s 11 Metropolitan Statistical Areas, and eighth in terms of income level, but is “growing very fast,” Williams said.

The Solano area ranks fourth for employment growth and eighth in population growth, he added.

“It’s a good sign,” Williams said.

Though new home construction continued to fall in Solano County and statewide in 2007, the drop locally was less steep than in some other areas, according to California Building Industry Association data. And Williams said he predicts increased housing starts in the next two years which could be good news if exiting inventory decreases, he said.

“We predict the Vallejo area will have the third biggest growth in housing starts, with a 25.8 percent increase between 2008 and 2010,” he said. “We will eventually dig ourselves out of this housing mess.”

Even if these predictions materialize, they don’t address falling real estate values, but even these can be positive, Williams said.

“It’s an opportunity for developers to buy land at lower costs, and the savings passed on to buyers,” he said.

Though severely impacted by the national subprime mortgage crisis, the Vallejo area’s real estate market may begin to turn around next year, said Solano Association of Realtors president Jeff Dennis.

“Economists are sending mixed messages, but I expect continued high inventory for the first part of the year, keeping prices from going up,” Dennis said no fax payday loans. “But I expect a moderate increase in transactions by the middle of ‘08.”

Dennis said he doesn’t see a full recovery until 2009 and not without federal help. The kind of federal help Alan Schwartzman of Benicia’s Advanced Mortgage Services says has already begun.

Congress extended the mortgage insurance deductibility and eliminated the taxability of proceeds from the sale of homes that sold for less than what’s owed,” eliminating the double or triple whammy,” such transactions had meant to sellers, he said.

“If Congress can make FHA reforms to stem foreclosures and help more Californians qualify for federally insured mortgages, this will slow the downturn,” Schwartzman said.

There likely will be fewer real estate and mortgage lending businesses in Solano County next year, but those that survive will be stronger, Schwartzman said. And if history is any indication, those in real estate for the long term should be OK, Dennis said.

“In the past, whenever prices have done down, they eventually come back up,” Dennis said.
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