It seems more and more likely that Melo will be leaving the Knicks this summer. I mentioned in the comments the other day that his decision to opt in/out will signal whether or not he intends on sticking around. It doesn't make much sense for him to opt out and commit to less than his max with the Knicks without assurance that another star player is on the way in 2015. If he's going to take less money he might as well be guaranteed to play with a better supporting cast. Two destinations that make the most sense given Melo's dual goals (cash + contending) are Chicago and Houston. Both teams might be able to manufacture the requisite cap space to offer Melo a respectable contract, however they may also try to engage the Knicks in sign-and-trade negotiations. Melo would probably prefer that route because it would allow him to earn closer to his personal max salary.
Here are some possible trades:
Boozer's deal expires in 2015 and although it wouldn't be fun hearing him scream "AND ONE!!!" on every other play, his contract is a necessary evil. The trade could work without his inclusion if the Bulls decided to amnesty him first, however given Jerry Reinsdorf's track record it seems unlikely that he will want to pay Boozer for nothing.
Taj Gibson is one of the best defensive bigs in the league and his offensive game has developed nicely over the past few years. His contract isn't great (3 years 24 million) but it's about right for a big man with his skill set. At the very least the Knicks could subsequently trade him for a decent future first round pick (the Kings are always looking for an extra power forward, right?).
Jimmy Butler's offense didn't improve in the way some (Bulls fans) hoped, but his defense is consistently great, and it must be tough taking on an increased offensive load when you're playing over 40 minutes on the regular and always guarding the opposing team's best player. With proper coaching him and Shumpert could be groomed to be one of the best defensive wing duos in the league.
Finally, the pick. Here's a hypothetical future conversation:
Jim: Steve told me that we're GETTING a first round pick in the deal.
Phil: Yea, we are.
Jim: That can't be right.
Phil: What? ...Why?
Jim: You can only send out first round picks in trades.
Phil: That's...that's not true.
Jim: I'm pretty sure it is Phil.
Phil: Then how did those other teams keep getting first round picks in all the trades you were part of over the past 10 years.
Jim: ...I gotta go write a blues song.
This trade doesn't make a lot less sense from the Knicks perspective. It would be tough to subsequently trade Asik and Lin since both are relatively one dimensional players that are making 15 million next year. Asik's one dimension is extremely important so a team might give up a first round pick for him, but the Rockets had him up for auction this past year (when his contract was more valuable) and weren't blown away by any of the offers.
It would be both weird and cool to have Lin back, but he doesn't really seem like the type of player Phil Jackson would want. His true calling in the league is probably as a sixth man who can come in, dominate the ball, and focus on scoring. He's a five million dollar player with an 8 million dollar cap hit that is getting paid 15 million next year. I don't like those numbers.
Parsons does everything pretty well but doesn't particularly excel in any one area. And at 25 he might be at about his peak performance level. Committing 10 mill a year to a pretty good player would be very Knicksian in the worst kind of way.
Those are a couple of possibilities. In a few weeks something will happen. The end of a short and unsatisfying era is upon us.