Reuters quotes portfolio manager Axel Merk's view on subprime bailout plan.

"Axel Merk, Portfolio Manager at the Merk Hard Currency Fund in Palo Alto, California:

'What Bush's plan will do is make poor homeowners slaves of their homes. If you can't afford a reset in interest rates when you have been paying 1 [...] percent, you might be able to get by when the rate is set to 3 or 4 percent. But the terms of the loan will require that you basically never pay down your loan. Unless they are bailed out by higher home prices, they are becoming prisoners of their homes.'

'And home prices cannot bail them out as lending standards tighten. If a bubble is not allowed to deflate, you make matters worse.' "