Not knowing whether the underlying operating system (Windows 7) is infected or not, is it safe to use LiveCDs to shop, bank, etc online without having to configure the firewall (e.g. iptables), antivirus, etc
When you boot from a LiveCD in a PC, you are stopping the operating system installed on any of the hard disks in a PC from booting. It never becomes active, and so no viruses (which are just applications that run under an operating system) can run.
If the environment is untrusted, then you are more at risk from other devices on the same network than you are the actual PC you are using.
Having said that, linux is largely immune to Windows based viruses - there are very few cross-platform examples of malware.
Having said that again, adding a quick rule to iptables dropping any incoming connections from the local network can't hurt.
Update If you want to ensure the livecd environment is secure in itself, then consider a Secure Desktop live cd.