The Dow fell below 7,000 this morning for the first time since 1997. That’s roughly a 28% drop since Election Day. American businesspeople and the investors supplying capital are in a panic, plain and simple. The administration has had weeks to provide a comprehensive and credible bank plan and it hasn’t delivered. The stimulus, omnibus, and budget legislation have taken a “bold” turn toward higher taxes, anti-business regulation (e.g. cap and trade), and nationalization. So what do you expect? The private sector has, as my kids would say, freaked.

The administration shows no inclination to turn back, because it lives in the political bubble of D.C. under the umbrella of adulating media coverage. There, Obama is riding high and plotting New Deal II. There, no one cares much — at least no one in power– what the investors, job-creators, innovators, and consumers think. The only question is “Can it pass?” The real question they should be asking is “How much damage is being done?”

As a political matter, the Obamazation of Washington, his endless ambition and stream of policy proposals will make it increasingly difficult to blame everything on Bush. The economy is growing sicker by the week, but like physicians of bygone centuries, the administration officials are administering the economic equivalent of leeches and blood letting. If the disease doesn’t kill the patient the cure seems designed to do the trick. But rest assured, Tim Geithner and Larry Summers are at the helm.