Jobless Rates and Housing Woes 

Unemployment soars to seventy-year high, while home prices rise — but maybe not really.

So is the housing slump over? Is the recession easing? It's hard to say, because contradictory economic reports are coming out almost daily. First the good news, such as it is. The median home price in the Bay Area rose in May for the second straight month, jumping 9.6 percent in comparison to April. According to the San Francisco Chronicle, the Bay Area median home price increased to $337,000. However, that's still only about half what it was at the peak two years ago, when it stood at $665,000.

Some market experts also warn that the increase in prices in the past two months may actually be due to a large number of more expensive homes being sold, which would skew the median upward. In addition, the more expensive homes are selling at discount prices, in comparison to what they were worth in 2007, which could indicate that the housing market remains depressed. Also, banks apparently are holding lots of foreclosed properties off the market out of fear that if they put them up for sale, it will decrease housing prices even more.

Now for the bad news. Unemployment keeps worsening. In fact, California's jobless rate reached 11.2 percent in May, the highest in nearly seventy years, according to the Chron. In the East Bay, the unemployment rate jumped to 10.4 percent — 10.7 percent in Alameda and 10.0 percent in Contra Costa. That's the highest local jobless rate since 1990.

And if that were not bad enough, the statewide average for gasoline topped $3 per gallon, according to AAA. Gas prices have shot up nearly 20 percent in the past month, thanks to rising oil prices. Gasoline averaged just $2.52 in mid May. But even with the sudden, steep increase, it's still way below its height of $4.61 per gallon one year ago.

Democrats and Taxes

State Democratic leaders announced last week that they want to raise taxes to help fix California's massive deficit. According to the Chron, the Dems want to increase taxes on cigarettes from $.87 to $2.37 a pack, institute a 9.9 percent tax on companies that extract oil from California, and raise the state vehicle license fee by $15. However, none of those proposals appear to have a chance of passing. Governor Arnold Schwarzenegger strongly opposes tax hikes, and the Democrats don't have enough moderate Republican votes to override his veto, let alone get their plan through both houses of the legislature. All of which raises the question: Why are the Dems wasting everyone's time? Well, the Oakland Tribune had a possible answer: It might all be a charade aimed at making liberal constituencies happy. The paper quotes an anonymous Dem, who indicated that party leaders proposed the tax increases to please progressives but will ultimately give up on the idea when the governor and Republicans refuse to approve them. If true, it's a pathetic attempt to appease liberals. Then again, we can't vouch for the Trib story because its sourcing appears thin.

The Democrats, meanwhile, also rejected the governor's plan to borrow $2 billion from cities and counties and they oppose Schwarzenegger's proposal to close 219 state parks and slash vital social services, according to the Chron. But without the tax increases, it's hard to see how the Democrats can live up to their budget promises. They have, however, agreed to nearly all of the $20-plus billion in cuts proposed by the governor. So even if the recession is nearly over, government services are about to get a whole lot worse.

Dellums Agrees to Pay Cut

In Oakland, Mayor Ron Dellums offered to do his share by taking a 10 percent pay cut. He also proposed slashing his office's budget by 20 percent. The mayor's proposal came in response to a call by four city council members to cut his office by one-third. Dellums said his plan was fairer because council members had offered to cut their own staffs by 20 percent, too.

And in a bit of one-upmanship, Dellums proposed eliminating slush-fund accounts, known as "pay-go," from both his own office and those of the eight city council members. He labeled pay-go as "not good policy" that "perpetuates parochialism." Some council members have historically used the slush funds to improve their individual districts, as opposed to supporting programs that benefit all of Oakland.

Three-Dot Roundup

Speaking of Dellums, it's not clear whether he plans to run for re-election. But it does appear that Councilwoman Jean Quan will mount a campaign against ex-state Senator Don Perata. ... Perata, himself, was back in the news when the man who carjacked him and accidentally shot and paralyzed a ten-year-old boy was sentenced to seventy years to life in prison. The boy, Christopher Rodriguez, now twelve and in a wheelchair, stunned the courtroom when he forgave the shooter, Jared Adams, and shook his hand. Perata later saluted the kid, but said he couldn't do the same. ... A new study says teens are cheating in school more than ever, using cell phones and other electronic devices in class. ... A federal judge in Oakland ruled that the military can recruit teens as much as it wants, striking down two Humboldt County laws that tried to stop the practice. ... In Fremont, Bloomberg News reported that the NUMMI plant may begin producing Priuses ... The owners of the Elmwood Theater in Berkeley may reopen the shuttered Cerrito Speakeasy Theater in El Cerrito. ... And a BART strikes looks increasingly likely as management and labor fail to reach a deal to cut employee compensation.


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