The big difference: the USSR was a "communist" country in that it was ruled by the Communist Party, its leaders went around proclaiming it was a communist country, and most outside communist-sympathising observers would have said at the time that it was communist.

The US has never been a libertarian country, in that the Libertarian party has never been in power, its leaders have never gone around proclaiming it to be a libertarian country, and foreign libertarian-sympathising observers (e.g. me) would never have said it was libertarian.

The question is: would the US/Iceland/UK have been better off under more regulated financial markets?

Actually I think the question is: would the US/Iceland/UK have been better off under differently regulated financial markets? And the answer is almost certainly yes, which leads to the question of precisely what kind of regulation is most sensible. Simply saying "we need more regulation" is a terrible idea, since many possible new regulations are likely to be useless or counterproductive.

Our economy is very mixed. Large portions of private money, semi-private money, and government money were sloshing about in the financial sector prior to the credit crisis. Blaming "libertarianism" or "government" for it is silly. Deeper analysis and more careful thought is needed in dissecting the lessons from recent events in the market. Causal links must be proposed and evaluated.

Also, I personally don't claim that libertarianism can only work in an unadulterated form. I think rather free markets work pretty damn well now, and that most of them would work better without tinkering from central planners. I don't think you could design an economic order without macroeconomic fluctuations, free or planned. I also don't think any regulator will be smart enough to design an optimal regulation scheme, or that one necessarily exists for a dynamic economy.

What is interesting is public opinion. That seems to have swung away from deregulation. It is (rightly or wrongly) being blamed for this. In many circles (more so outside The States, I think), non-intervention is tolerated because it works, supposedly. A lot of people have accepted that while it is unfair, unsavoury, & generally unpleasant, but it works. Now it doesn't always work.

As far as the rest of the world goes, European economic courses focus on the evils of the market and Marxist models of class struggle, so they're pretty much a lost cause too.

I don't think that's fair. I think the public's opinion is being reflected from the sentiment in the public debate around the world. Politicians, central bankers, academics, big name investors, etc. The specifics of interventions (proposed laws for bailouts) have been supported by public figures usually on the libertarian side of the policy (eg Rupert Murdoch). It's true, they've still stuck to their respective positions: John McCain is still more of a libertarian then Obama, Hugo Chavez hasn't moved much, etc. Die hards are still dies hards. But, the whole debate has shifted left.

This is very likely to bring with it other changes. I complain about people looking at the political spectrum simplistically just like anyone else. Left on A shouldn't mean left on B. But in reality, these things seem to be associated.

You can construct lots of internally consistent ideologies that would be perfectly stable in a vacuum. The difficult part is making one that can survive when put into competition with other ideologies and still be benevolent. Any survival of the fittest type selection will tend to favor nasty traits such as xenophobia.