With each passing day, the 2008 Global Financial Crisis increasingly looks like a mere dry run for today’s economic catastrophe. The short-term collapse in global output now underway already seems likely to rival or exceed that of any recession in the last 150 years.

Even with all-out efforts by central banks and fiscal authorities to soften the blow, asset markets in advanced economies have cratered, while capital has been pouring out of emerging markets at a breathtaking pace. A deep economic slump and financial crisis are unavoidable. The key questions now are how bad the recession will be and ...