Can Capitalism be turned on and off like tap water ?

These are extra-ordinary times and require similar thinking and actions.

Capitalism and private enterprise have blown their chances by playing fast and loose and are on retreat all over the world.

Central Banks have to rethink their monetary intervention policies. Tweaking OCR will not work anymore because that is the rate at which Banks get their money but not the rate at which customers get it for their loans. Banks do not pass it on fully, naturally, as they are middle-men and look to their profit and bonuses (dirty word now) especially in these lean times. And also Banks hare now afraid of lending - like the proverbial cat that drank the hot milk and shied away from milk for a long time.

The way to go forward may be that Central Banks should get involved in Commercial Banking either directly or indirectly (part nationalisation perhaps) and direct lending to desired sectors of the economy at desired interest costs so the economy could be given the boost correctly.

Western Governments can play this game and use their resources to buy up some good financial assets which they can offload later for profit. Remember the bailout funds now being given to the Banks are going nowhere now and even the Americans are being stumped as to what to do. Call it 'market socialism' or whatever. One caution though, don't hire the financial wizards from the American Universities who screwed up the world economy in the first place.

Some European countries like Sweden have done it successfully in the past.

So it is time to start thinking outside the box of standard Capitalistic and Free market style at least for the next few years.