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Michael E. Lewitt Benedicte Gravrand, Opalesque Geneva:

Michael E. Lewitt, manager of the Third Friday Total Return Fund, L.P., author and market commentator, says in a Q2 letter to partners seen by Opalesque that the fund had returned 6.5% YTD despite an unusually large cash balance (>50%). It normally has one of around 25%, "but we see a dearth of attractive uses for our collateral in today’s markets," he adds.

Nevertheless, as the funds’ assets grew in the second quarter to more than $100m, he launched an offshore version of the fund for non-U.S. investors on July 1, and he is planning to launch an insurance dedicated fund soon.

Serious market problems The second quarter, he comments, ended with three serious market problems, namely in Greece, China and Puerto Rico; "All three situations, regardless of their specific outcome, are symptoms of the same underlying disease that infects the entire global economy – unsustainable levels of debt that can never be repaid."

Chinese authorities, in their attempt to shift speculation from housing to stock markets, now have a disaster on their hands. Their efforts to stabilize markets means the equity market is no longer functioning. The sell-off isn’t over, he warns.

Greece, which never had any prospect of paying its debts, has now been forced into a humiliating d......................

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