Without a successful rescue package for the banking sector, the U.S. economy could plunge into depression, says INSEAD economics professor Ilian Mihov, who co-authored several papers with Fed Chairman Ben Bernanke, including one on the Great Depression. More bank failures, he predicts, would spiral into forced asset sales and further damage bank balance sheets. "This is a vicious cycle that could lead to an implosion of the real economy," he says.

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