The US economy is humming — output is up about 4% on a year earlier, unemployment is at a 28-year low, and equity markets are richly valued. Inflation is benign.

But Long-Term Capital Management — a hedge fund whose Nobel-laureate-staffed bets on convergence trades soured after Russia's August default — came within days of failing. Its $125 billion balance sheet and more than $1 trillion in notional derivatives threatened to cascade through the dealer banks.

On September 23 the New York Fed brokered a $3.6 billion private recapitalization, but markets are still gripped by deleveraging. The question on your desk: should the Fed cut despite a strong economy, to restore liquidity?