US 'will need bailout help from Japanese'

A JAPANESE analyst has painted an apocalyptic picture of the US economy, and called for Japan to rally to its aid with an assistance package.

Akio Mikuni, president of credit ratings agency Mikuni, predicts the dollar will collapse by 40% against the yen, the US budget deficit will grow to more than $1 trillion (£677 billion) and Treasury yields will fall further.

Mikuni said that will make it nearly impossible for the US to finance its soaring debt, and Japan should write off its holdings of Treasuries.

"It's difficult for the US to borrow its way out of this problem," Mikuni, 69, told Bloomberg Television. He added that "drastic measures" by Japan are needed to help bail out the Americans.

He said that the Federal Reserve's massive interest rate cuts to near zero would have no impact on consumer spending as householders are paying down debt, recognising even more difficult times are on the way.

Combining debt waivers with infrastructure spending would be similar to the Marshall Plan that helped Europe rebuild after the destruction that was caused by the Second World War, Mikuni added.