Swiss animal lover Priska Küng runs a kind of matchmaking agency — for lonely guinea pigs that have lost their partners. She lives with around 80 of the furry, squeaky little creatures, in addition to six cats, a number of rabbits, hamsters and mice in the village of Hadlikon, some 30 kilometers from Zürich.
Küng, 41, rents out her guinea pigs, a service that has been in high demand in the Alpine nation ever since animal welfare rules were tightened up a few years ago. Switzerland has forbidden people from keeping lone guinea pigs because the animals are sociable and need each other’s company.
As a result, the sudden death of a guinea pig, shocking enough in itself, can also place the hapless owners outside the law if they only had two of the pets.
Here’s the efficiency point, concerning liquidity premia and carrying costs and inventory cycles:
Without her rent-a-guinea pig service, the owner would have to purchase a new, probably younger guinea pig as a companion to the ageing survivor, whose eventual death would force the purchase of yet another guinea pig, locking the owner into an endless cycle of guinea pig purchases in order to adhere to Swiss law — even though he or she may only ever have wanted one guinea pig in the first place.
As you might expect from the Swiss, it’s done through a repo:
She takes 50 Swiss francs (€41) for a castrated male and 60 francs for a female, “as a deposit,” Küng explains. In effect, she sells the animals but pays back half the purchase price when they are returned
Attention all you hedge fund readers: if these people can arbitrage and convexify their guinea pig market, you’d better not bet against their currency peg.