Guess who is the second largest buyer of US debt? Japan.

Guess who will have better things to spend money on than US treasuries? Japan.

Japan’s need to raise huge amounts of money for reconstruction after the disastrous earthquake raises the prospect of higher U.S. costs to finance its own budget deficit and ultimately higher costs to American consumers on financing everything from houses and cars to credit card debt.

Tokyo has long been a major purchaser of U.S. Treasury bonds, helping to keep demand for U.S. debt high and the cost of financing it low. Last year, Japan bought about $130 billion in Treasuries, much of it with funds accumulated from the nation’s trade surplus.

Now, as it begins the costly process of rebuilding, Japan will almost certainly be buying less Treasury debt and other foreign assets. That in turn could push the United States to pay higher rates on its securities to attract new buyers, eventually putting upward pressure on other U.S. interest rates — including what American consumers pay for credit…