Alton told Sky News Online that the state of the newspaper market was "horrific", saying that there's already been "carnage" and he'd be "amazed if some newspapers didn't fail" during the recession.
He said: "The combination of free newspapers, free content on the internet, coupled with this most astounding recession, makes it a very, very inhospitable time for newspapers.
"A lot of newspapers are in trouble, but we're in a more vulnerable position because we're smaller. If I could do anything, literally anything, to reverse it -- I'd saw off my right forearm -- I would."
Despite the terrible market conditions, the former editor of The Observer blamed himself for the falling circulation of The Independent and took full responsibility.
He told Sky News Online: "I feel a terrible personal failure, it's a very nasty place to be if you're me.
"I feel like I've let down all the staff -- it's a tight, lean staff who work fantastically hard and I feel like I haven't been able to deliver either to them or the senior management."
Alton admitted the decision to raise The Independent's cover price from 80p to £1 in early September, making it more expensive than the Telegraph, Guardian and Times, had backfired on sales.
Alton said: "It's made us very vulnerable. We were aware of the risks when we did it and the ice cold winds of the recession have increased to gale force more or less from that day.
"From the bottom of the market to charge the most was always very risky."
Independent News & Media, owner of The Independent and Independent on Sunday, revealed plans last week to cut 90 jobs, mostly editorial, across the two titles in a move aimed at saving more than £10m annually.
The cuts follow a steady sales decline at the titles. The Independent's sales fell 16.29% year on year in October to an average circulation of just 201,019 copies.
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