The coronavirus pandemic has triggered a combined negative supply and demand shock of unprecedented intensity. Both are having a significant impact on the production of goods and services, and because everyone’s income ultimately derives from production, household incomes are quickly falling. With many economies already in a downward spiral and heading toward recession, the danger is that the downturn will become a self-perpetuating and ever-deepening rout. The twin supply and demand shocks are likely to trigger many ‘domino effects’. Companies with large fixed costs that suffer a sudden fall in income are facing financial difficulties, or even bankruptcy. When that happens, the banks and other entities that have lent money to these companies will also be in trouble. That is why massive economic shocks can often lead to banking crises. But the dominoes don’t stop falling there. Governments, too, can face fiscal dangers when they step in to mitigate the crisis. In the case of the current pandemic, national governments will need to save businesses from bankruptcy by granting financial support and subsidies, assist workers by funding temporary unemployment schemes, and possibly even come to the rescue of large banks. Worse, all of this must be done at a time of declining tax revenues, which means that government deficits and public-debt levels will skyrocket.