1 - The Q1 supply shock is going to be a temporary thing. They'll recover alright after causing some companies to miss their Q1 earnings. If this was the only effect, we would recover just fine here later this year, but...

2 - Coronavirus is just getting started in the US and Europe. If it spreads widely, and unabated, then the those countries will be forced to enact school closures, business closures, etc, which will cause a massive demand shock.

3 - Demand shock will tank airlines, cruises, restaurants, malls, etc. Basically anything that requires groups of people to make money.

4 - Eventually, demand shock will hit corporate balance sheets in a big way. Many corporations (especially in the energy industry) are overloaded with debt [1]. If this goes on long enough, then those companies will go bankrupt.

5 - If enough companies default on their debt simultaneously, then derivatives on corporate debt (defaults) will cause a systemic crisis again [2].

There's no guarantee that this will happen, but if it does it's going to make 2008 look like a joke by comparison.

If it does, we need to do the right thing this time: wind down the banks and let them fail.

For the downvoters:

[1] https://www.nytimes.com/2018/09/01/opinion/the-next-financia...

[2] https://www.wsj.com/articles/in-a-blast-from-a-financial-cri...