Beijing Hoards the Greenback

Sound the alarms! China's foreign currency reserves have now topped the $2 trillion mark—$2.13 trillion to be exact—most of which is held in U.S. dollar assets "despite Beijing’s recent criticism of the dominant role of the dollar as a global reserve currency," the Financial Times reports. China's foreign currency reserves increased a whopping $177.9 billion in the second quarter, up from just a $7.7 billion hike in Q1. The Wall Street Journal is not surprised by the surge. "The renewed gains in reserves are consistent with other figures from the U.S. Treasury and Federal Reserve showing that China's purchases of U.S. Treasury bonds have stayed at high levels in recent months," the newspaper writes. The FT reckons that with signs of resurgence in the Chinese economy, the central government will once again institute a hard currency peg to the dollar, no doubt triggering howls from Washington and Brussels that it gives Chinese exporters an unfair pricing advantage. "We have now moved back to a virtual US dollar peg," an economist affirms to the FT. 

The financial picture looks much less promising in Japan. This morning, the Bank of Japan extended an emergency-credit program and lowered the GDP growth forecast for the current fiscal year, Reuters reports. By extending the credit program, cannily just before national elections in August, Japan hopes to jump-start its clogged credit market, Bloomberg reports.

Goldman Sachs (GS) is faring just fine amid the worst economic downturn in generations. It announced on Tuesday its most profitable quarter ever, as it "snatched business away from weakened rivals and churned out huge trading gains by revving up risk taking," the WSJ reports. Goldman's second-quarter profit hit $3.44 billion, or $4.93 a share—"more than Goldman earned in all of 2008, when it was hammered by the financial crisis," the newspaper points out. It was the richest quarterly profit in Goldman's 140-year history, the New York Times tallies. The strong showing means one thing for its investment bankers: big fat bonuses. "Pay at Goldman Sachs this year is set to beat the boom levels enjoyed before the financial crisis, when top executives raked in tens of millions of dollars in year-end bonuses," the FT writes.

Freed from the shackles of government bailout funds, JPMorgan (JPM) is "stepping up its opposition to the government's proposed legislation on derivatives and telling the Treasury Department it is fed up with haggling over the value of warrants that the government holds in [the bank]," WSJ writes. This rediscovered swagger comes as JPMorgan is set to announce strong quarterly results that will cement "its place as the strongest major commercial bank." And while it is unlikely to post Goldman-esque returns this time around, its strong Wall Street business is a result of investing, acquiring, and expanding when some of its rivals were simply shrinking to survive, notes the paper.

The chips are up in Silicon Valley after Intel (INTC) reported its strongest pickup in business in more than 20 years, the FT reports. While sales were down from the same time last year, demand for Intel's microprocessor chips has surged to the tune of $879 million since the first quarter of 2009 as PC sales have rebounded, CNN Money adds. And while these figures will have the entire tech sector taking note, it's the netbook PC makers that might be most upbeat. Sales of Intel's Atom chip—the units that go into smaller netbooks—spiked 65 percent from the first quarter.

And finally, could Bernie Madoff be let out of the slammer early? Well, depending on your definition of early. The NYT reports on the occasion of Madoff's arrival at a federal correctional facility in North Carolina on Tuesday that the Bureau of Prisons "has projected a release date of Nov. 14, 2139, for Mr. Madoff, assuming he gets early release credit for good behavior." On that date, Madoff would be a spry 101.