Akio Mikuni, president of Mikuni & Co., Japan’s leading credit rating agency, proclaimed Wednesday that the United States is likely to suffer major issues in paying for the increasing levels of debt as the economy falls deeper and deeper in to recession.

Mikuni suggests the Japanese government writes off all holdings in U.S. Treasuries and other government securities, citing estimates of huge currency value loss and dramatic declines on Treasury yields. Writing off U.S. Treasuries and other forms of international debt relief, Mikuni said, would assist the U.S. in bailing out their own economy, and may assist in the recovery of the situation.

The budget deficit in 2008 is expected to rise to nearly $1 trillion U.S, with over 75 new entitlement and recovery programs designed to dig the country out of recession.

Analysts believe that reductions of the prime interest rate at the Fed, which currently sits at 0.25%, are not having an effect in stimulating the economy because consumers are already spending their dwindling incomes financing pre-existent debts.

Mikuni’s questions have led analysts to believe that without intervention or debt relief at an international level, the United States will be forced to fall in to default on many of their positions, resulting in a gross devaluation of U.S. currency and likely a further collapse of both the U.S. and international economies.

“Japan’s economic model has been dependent on external demand since the [1868], the model where the U.S. relies on overseas borrowing to fuel its property market is over. A strong yen will spur Japanese domestic spending and reduce import prices, thereby increasing purchasing power.”

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