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Opinion

Inside investment: Cat’s cradle of developed country debt

The ties that bind sovereign issuers and investors are intricate and complex. With sovereign defaults a real and present danger, they should be untangled before it is too late.

When I was growing up in a very small village in Berkshire County, Massachusetts, it was usually impossible to assemble more than two, three or four children to play baseball or football after school. Most of the kids were from farm families, where those older than five had chores that took up their time before and after school. Sometimes we had to play two-man baseball or football, or once in a while a game called cat’s cradle.

This involves two people wrapping string around their hands to make different shapes by alternately taking the string while still wrapped around the other’s hands without tangling it. The cat’s cradle record, according to the Guinness Book of World Records, is held by a couple in California who created more than 21,000 cat’s cradles over a 21-hour period in the 1970s. (As California’s bondholders know to their cost, this is a state in which "nothing exceeds like excess", to quote Oscar Wilde.)

Cat’s Cradle is also the title of a novel by Kurt Vonnegut that I read shortly after it was published in 1963. Here, the cat’s cradle was something very complicated that suddenly and irreversibly ended.

The thing I have always remembered from the novel, which deals with the indifference of scientists to the effects of their discoveries, such as the atomic bomb, was that the protagonist created a crystal that would make water freeze at normal temperatures.

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