After a lot of struggle (in my younger days I would have learned the coding, and reprogrammed the whole thing), my links are working again, though I have had to sacrifice the descriptive permalinks for now.? In the bargain, at least I upgraded to WP 2.3.1, which is a lot slicker than the old version.

For this evening, I want to offer you two unrelated thoughts on the markets.? The first is that the plan of the Treasury to freeze reset rates on subprime mortgages is a great big zero.? The real problem is too many homes chased by too few people able to afford them at current prices.? Subprime loans are a very modest portion of residential real estate finance.? Beyond that, the Treasury proposal does triage — separating borrowers into healthy, dead, and savable.? The savable are a small portion of a small component in the total residential financing scheme.? It will keep a few more people in their homes,? but that’s about it.? There will probably be court challenges from hedge funds that lose interest from the changes; they will probably win, because this is an illegal “taking” by the US Government.? That said, there is no way that I can see that they will be able to collect damages.

I said this was a zero, because 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 US citizenship to anyone who buys a house in the US free and clear (for more than $250,000), is a non-starter for a wide variety of reasons, but it would kill two birds with one stone.? Clear up the excess houses, and solve the current account deficit problem.? A side benefit is giving wealthy foreigners a stake in the prosperity of the US.

Here’s my second thought.? Japan wants China to revalue its currency upward.? Perhaps that’s no big deal, but it reflects US dollar weakness.? China has been running a dirty crawling peg versus the US 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 US Dollar fall more, and let other nations buy our goods and services, rather than just swallowing our bonds (promises to pay later).