Since the majority of upside-down homeowners live in California, Arizona, Nevada and Florida, where homes are more expensive, it’s not unreasonable to think this number is closer to $300 billion. It’s no mystery as to how Congress arrived at the total figure for their ineffective housing bill.

The challenge is to sop up negative equity without torpedoing the dollar, as would happen if the Treasury Department simply cut the mortgage industry a $300 billion check. But the money is out there; it’s just a question of tackling the prickly issue of exactly where it is.

According to data compiled by the Census Bureau, in 2005 the collective balance in Americans’ 401k accounts stood at $1.2 trillion. If homeowners were allowed to tap their retirement funds without penalty to pay for their negative equity, 75% of our retirement war chest would remain intact - and the economy could begin a real healing process.

That I’m even proposing such a solution shows how dire the situation is, and how few good options are left.

This may not be an entirely popular idea for a host of reasons.

Many would argue it’s unlikely borrowers who are underwater would have sufficient retirement savings for such a scheme to work. That argument is based on a common misconception, however: That subprime and being upside-down go hand in hand.

During the boom, many good-quality borrowers with good jobs and money in the bank were jammed into Alt-A or even Agency (backed by Fannie or Freddie) loans with high loan-to-value ratios. That means typical middle-class families that bought at the peak are in the same boat as their subprime brethren: A boat dangerously below the waterline.

Others may argue the cost of paying for our longer lives is already likely to bankrupt Social Security and endanger the retirement of millions.

Pilfering retirement accounts truly is mortgaging the future for the sake of the present. But consider the assumptions upon which current retirement cost expectations are based.

ING (ING) runs a snazzy ad campaign depicting concerned citizens toting around their “numbers,” toiling each day in hopes of reaching the net worth required to retire comfortably.

"Comfortably" -- as defined by our McMansions, SUVs, strip mall consumerism -- means a beachfront condo in south Florida, a 4000 square foot Toll Brothers (TOL) luxury track home in Scottsdale, or sweeping vistas from a custom-built manor on the Pacific. Your “number,” as determined by the investment advisors and stockbrokers at Merrill Lynch (MER), is based on pre-credit crisis consumption trends.

Social mood has shifted. We’re seeing the beginnings of a migration towards simplicity, minimalism and attendant revulsion at our past excesses. The future, in short, won’t be nearly as expensive as we think.

30 years from now, when today’s underwater homeowner becomes tomorrow’s retiree, the good life may be defined as a quaint bungalow on the Sea of Cortez, a loft in Buenos Aires’ Palermo district or a remote cabin perched on the edge of a Norwegian fjord. All these options provide just as much, if not more, opportunity for relaxation, peace and the quiet contemplation so many desire in their waning years - at a fraction of the cost.

Mortgaging a piece of our future may be our best bet to have one at all.