I lost a bet today.  In the craziness that followed yesterday's financial news, a couple of colleagues and I disagreed on what the Federal Reserve Board would do today.  I thought an interest rate increase was all but inevitable: the pressure to "do something" to respond to the multifaceted, perhaps unprecedented, turmoil would just be too great.  Indeed, I thought a big move was likely, 75 basis points.  Another colleague had similar thoughts, but for the purposes of placing a bet (we each anted up $1.00) he took 50 basis points.  A third fellow said the Fed would sit tight with no increase at all.  I thought for sure I would be taking his money.  But no.  The Fed did nothing.

    As I handed over the dollar, I consoled myself with this thought: in this instance Bernanke and company followed a Taoist impulse.  They did nothing.  I know, they have been nervously fiddling with rates the last few years.  But today they just let it be.  Let's just hope that, in doing so, that the Tao Te Ching ideal will follow: in doing nothing there is nothing that is not done.

UPDATE:  Not!  It seems the Fed did nothing this afternoon with interest rates in anticipation for doing something much bigger this evening with AIG: an $85 billion bailout – or is it a takeover?  We'll have to wait and see how it works out, but definately not Taoist.  Not really Confucian, either; though, perhaps some jusification on preserving community interests might create some Confucian-esque resonances.  Would Mencius get into insurance?  I think I'll just have to give up: the high politics of global capitalism may be too remote from the sensibilities of the Chinese classics….

UP-UPDATE: For those, like me, struggling to sort it all out, this WSJ piece is helpful.