This is a revised version of my argument in response to an article "Treasury's Subprime Rate Plan is a Great Big Zero"written by David J. Merkel, CFA, FSA, a leading commentator at RealMoney.com.

In David's article, there are two arguments:

1) Paying the mortgage payment is not the problem here; it is the overhang of excess houses. This does nothing to solve that problem. My more radical solution of offering free U.S. citizenship to anyone who buys a house in the U.S. free and clear (for more than $250,000),....... but it would kill two birds with one stone: Clear up the excess houses, and solve the current account deficit problem.

2) China has been running a dirty crawling peg versus the U.S. dollar, while letting other currency relationships languish. As a result, the Euro and the Yen have gotten expensive versus the Yuan. In this case, I think the Japanese are correct. Let the U.S. dollar fall more, and let other nations buy our goods and services, rather than just swallowing our bonds (promises to pay later). 

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I have big problems in understanding the logics behind your words, particularly to your first radical solution.

Do you think people with $250K really want to buy our property at an inflated phony price to get our citizenship? As I know, there is an assumption you may have: USA is the best place in the world.  Are you sure we are one of the best?

30 years ago, California is the #1 golden state in USA. And now, people move out. As I know, 20 years ago, we attracted a lot of new immigrants from some developed and affluent countries. Now, still a lot of people want to come to USA.  But from where they come?  Ooh! from mexico, so that we have to build a brand new American "Chinese Great Wall"?  Do they have that kind of CASH to buy our citizenship? Can you not just assume it and give us more data to support the solution?

I am used to not too concern about our trade deficit as well as other countries' claim of the number 1 foreign reserve. Because I firmly believe the concept of "Balance of Payment" is a better one to explain and portrait the reality of international trade. While we are "confusing" us with "median housing price" in RE industry , the term "trade deficit" is broadly misused and set into the minds of our general publics.

As you know, the figures of trade deficit are based on those numbers of "merchandized" goods. In our modern society, we are still willing to use a out-dated numbers mainly referred to agriculture or manufactured production. Do you think our society is still composed of "first industry" and "second industry"? We are no longer there since 1956 when our "after-industrial" (so-called "third or service industry") population surpassed other two sectors. Wake up! Can we afford to use obsolete concepts to be the bases for our decisions?

Where are those incomes for our intangible goods, service and military sales from the rest of the world go? Do we factor them into the trade deficit? Such income as royalty dividend, license fee or intellectual property. They went into some big guys pockets, right?

Here somehow some people are trying to hide a real problem we have: social equality, unfair wealth distribution or unfair taxation that are taking place in our systems. Your argument is simple-minded. To me, the value of our dollar going down is not a rational or necessary approach to benefit our national economy or the welfare of the publics. It does no good to us, period.

Yes, David, you are smart to see the problem we have in RE recently: excess houses.  In business, we call it "excess inventory." How a regular businessman takes action to solve the problem normally?

You will agree that it is the case he has to have a clearance sale to get rid of those non-moving inventory (in RE software, I call it "non-performing assets"), even at a paper loss to get his capital back for its liquidity to survive.

Sure, he can do the opposite. He may take the approach that Best Buy or Circuit City are using. He doesn't have to mark down their prices. Instead, he charge a customer an inflated price and has him pay a higher sales tax in a smoky "scam": giving you a rebate of hundred's dollar later. That's a MBA smart money trivia: to have your money upfront as a free loan to them first and have a rebate center process your request to give it back as a promotional favor to customers. Gee! Great genius invention.  It not only has a valid statistics to back its profit (do you know how many people do not claim the rebate? Guess the percentage.)  But also, it is used to artificially hike our GDP (more jobs created, more time and money spent, but no real production produced to our economy in real and aggregate terms.

But is the Best Buy approach workable in selling our excess houses? No. I believe you can see the real core issue is not "excess houses", but "inflated housing price tag." As every one said, ABS has no value support for their high prices as a stock is over-priced.  That caused investors suddenly stop buying them and out of the field.

"No investors, no buyers" is the cause to our current financial chaos.  Then, there is a very obvious action to take: we have to bring them back into the business at their will.   It is the right way to do business just as Citi Bank went to Duhbai last week to sell their 4.9% stock at a reasonable low price.   Why such a businessman as Wall Street financial guys cry loudly to their "seeming only rescuer": FED for relief plans to try keep our housng price up there that will further weak the confidence of investors and keep them out.   Is it the decent way to solve the problem?

Hope you agree that it is NOT a solution by your common sense. It will prolong the pain and create more worse side effects on our economy.