The Anglo-American style of unregulated “free market” function is a foreign concept here. Traditionally, Iran has maintained an étatist-interventionist system mixed with respect for private ownership seen in 1960s France or Italy. Even prior to the 1979 Revolution, mind-numbing and complex regulatory systems, duplicate jurisdictions and changing regulations supplement rigid rules governing entry or exit of capital from abroad, foreign currency deals, financial markets, interest rate rules, import or export of goods and services. It is an old-fashioned economic structure that never bought into the free-for-all market schemes and derivatives. Although there is a stock exchange (up about 28% for the last 12 months, in dollar terms), there are no “investment” bankers, quantum traders, computer-generated deals, derivative paper artists or bull trademarks in zero-sum transactions. Iranian stock brokers do not advertise in the middle of a comedy TV show. Thus there is no urgency for bailouts that exceed all-time profits of all tobacco companies, or the aggregate profits of all oil companies for the last 20 years. The Iranian treasury minister does not aspire to corner the domestic mortgage market and shoo away supervisory authority of courts and regulatory oversight.

Warts and all, the Iranian economy cannot be compared with the American economic model and its vast amounts of consumer debt, dizzying heights of leverage and the borrowing seizures that leave citizens breathless when the price of fuel goes up by 10 percent. In this modest, old-fashioned, and developing economic structure, investors and sources of capital are busy competing to get involved in authentic deals: privatization of government-owned factories, investment in sectors that are saturated in Western Europe and North America—housing, cars, clothing, food processing, banking, health care and pharmaceuticals. All are growing due to real, organic demand from Iran’s very young population, coupled with a noticeable upgrade in living standards. Moreover, there is almost unlimited demand for Iranian energy and petrochemical exports from the Indian subcontinent and points further east. These deals attract capital investment in very solid and long-term transactions. Much of these investments are funded from the Oil Surplus Fund that is legally slated for investment in capital infrastructure projects.

It also helps that Iranians are savers and fiscally conservative, in a country where there is no mortgage system nor credit cards and where car loans and leasing are merely a five-year novelty. In turn, this translates to solid formation of capital for families and the society, however modest compared to developed countries. And like others in the world, Iranians always demand better service from schools and hospitals and the government, cleaner air, higher quality products, cheaper prices and lower interest rates. This kind of real demand keeps the economic system vibrant.

The present case in America, where socialism has been sold as a bad idea, is not a revival of socialism, but a massive correction of a very large error--a super leveraging game gone wild. However, most OECD countries as well as other large economies (Russia, China, India, Brazil and OPEC countries) have a stemmed state intervention system in place as they subscribe to a progressive, evolutionary approach. Sweden, for example, is a highly advanced country with a competitive labor market, world-class products and a respectable social security net for its citizens. The American system is hardly free of state intervention, albeit in the form of often conflicting or confusing laws, the dual federal and state stifling layers of regulation, and a massive litigation and lobby machine to stitch up a fluid scene.

The exercise in progress by Uncle Sam is simply a very large and costly de-leveraging project to control further damage. Alas it might appear as a transformation from financialization of markets to socialization of finance. But a root-and-branch restructuring, it is not as American statesmen insist on their narrow interpretation of “life, liberty and pursuit of happiness”-- a need for a fix for a trickle down, from-the-top version of a skewed supply-side doctrine. Adam Smith’s invisible hand is merely engaged in shifting very large amounts of debt from the private sector to the public sector, all without changing the regulatory circuits. But how will it all be paid back? Will American financiers truly lend more money to the same defaulters, as a kind of patriotic move to restart the economic engine or help borrowers to pay back the older debt? Or is it more realistic to expect a “me too” tsunami of rescue demands from other sectors of American business--from airlines, automakers, shipbuilders and textile producers or farmers and truckers that will loudly complain about their poor state of affairs or high fuel costs? And what is to stop cries for subsidized deals in the healthcare sector, a national health insurance program, Hollywood or Las Vegas casinos with lower number of visitors?

However, the most fascinating observation of American episodes is the inherent contrast with the era of 1929 and 1930’s. In those days, the developed world financed the developing world, be it with aid or trade. In these modern times of consumption led boom and bust, the tables are turned. Money from developing countries (China, Russia, Saudi Arabia and Kuwait) will ultimately buy American bonds and finance the ride of financial convulsions in the developed world. Decades spent in both the developed and developing countries (former USSR, Eastern Europe, Turkey, Asia) and their financial meltdowns lead me to suppose this tempest shall trigger a familiar shift of paradigm in economic models and defined management systems. However, and in this era of political cross dressing, the trillion-dollar sticker price might well be the opening flutter in a poker game-- where the deck is rigidly stacked against the ordinary citizen as the U.S. dollar will massively devalue.