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The great Motivational Seminar has come and gone

The U.S. economy probably grew at a slower pace in the first quarter as a jump in gasoline prices caused consumers to cut back, economists said a report this week will show.

Gross domestic product rose at a 1.9 percent annual pace after increasing at a 3.1 percent rate in the previous three months, according to the median estimate of 66 economists surveyed by Bloomberg News before an April 28 Commerce Department report. Other data may show business investment remained a pillar of the economic rebound, while home prices fell.

Federal Reserve policy makers, when they meet this week, will likely say they’ll complete the second round of stimulus worth $600 billion, as scheduled, through the end of June to help sustain the recovery. While companies like General Electric Co. (GE) and Apple Inc. (AAPL) are among those benefiting from gains in spending on equipment and software, households are feeling the pinch of higher food and fuel prices.

“The economy has hit a bit of a soft patch,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “If we continue to get these sharp jumps at the pump, that will be a major hit to consumer sentiment. There is a tipping point for consumers.”

The GDP estimate is the first of three for the quarter, with the other releases scheduled for May and June when more information becomes available.

Spending Cools

Household purchases, which account for about 70 percent of the world’s largest economy, rose at a 2.1 percent annual pace following a 4 percent gain in the last three months of 2010, the best performance in four years, according to the survey median.

Higher prices for necessities like food and energy may have hurt spending on less essential items. The cost of a gallon of regular gasoline rose 18 percent in the first three months of the year, according to AAA, the nation’s biggest motoring organization. The price has increased another 6 percent so far this month, reaching $3.85 a gallon on April 21, the highest since September 2008.

Prices for all goods and services rose last quarter at a 2.4 percent annual pace, the biggest gain in more than two years, economists forecast the GDP will also show.

American manufacturers are faring better than consumers as increasing demand from emerging economies like China supplements gains in business spending.

‘Good Shape’

“We’re in really good shape for accelerating industrial earnings growth,” Jeffrey Immelt, chief executive officer of Fairfield, Connecticut-based GE, said on a conference call last week. “All the precursors are in place: good equipment orders, good backlog growth, good service orders, international growing double digits, and we’re investing to build competitive advantage.”

Orders for durable goods increased 2 percent in March after a 0.6 percent decline the prior month, economists forecast Commerce Department figures will show on April 27.

Shares of machinery makers have outpaced the broader market since the beginning of the year. The Standard & Poor’s Supercomposite Machinery Index has climbed 9.8 percent compared with a 6.3 percent increase for the S&P 500 Index. (SPX)

Fed policy makers, in two days of meetings beginning April 26, are likely to affirm they’ll finish a $600 billion Treasury- purchase program on schedule at the end of June, according to economists such as Neal Soss, chief economist at Credit Suisse in New York. Chairman Ben S. Bernanke will hold his first press conference following the central bank’s statement on April 27, giving him an opportunity to discuss his next steps.

Home Prices

Housing continues to struggle as foreclosures mount. Home prices in 20 cities for the 12 months through February fell 3.3 percent, the biggest decline since November 2009, according to the Bloomberg survey. The S&P/Case-Shiller index is due April 26.

Sales of new homes, due tomorrow from the Commerce Department, rose 12 percent to a 280,000 annual pace in March, according to economists surveyed by Bloomberg. February’s 250,000 purchase pace was the lowest in data going back to 1963.

Pending home sales, or contract signings for existing homes, rose 1.7 percent in March after a 2.1 percent increase the prior month, economists forecast the National Association of Realtors will report on April 28.

Gains in employment, along with higher stock values, are outweighing the rise in gas prices and declining home values when it comes to measuring consumer attitudes.

The Thomson Reuters/University of Michigan’s final sentiment index for April, due April 29, is projected to climb to 70 from 67.5 at the end of March, according to economists surveyed. The New York-based Conference Board on April 26 may show its confidence gauge rose to 64.5 from 63.4 last month, the survey showed.

Bloomberg Survey =============================================================== Release Period Prior Median Indicator Date Value Forecast =============================================================== New Home Sales ,000’s 4/25 March 250 280 New Home Sales MOM% 4/25 March -16.9% 12.0% Case Shiller Monthly MO 4/26 Feb. -0.2% -0.4% Case Shiller Monthly YO 4/26 Feb. -3.1% -3.3% Case Shiller Monthly In 4/26 Feb. 140.9 140.2 Consumer Conf Index 4/26 March 63.4 64.5 Durables Orders MOM% 4/27 March -0.6% 2.0% Durables Ex-Trans MOM% 4/27 March -0.3% 1.8% Cap Goods Core MOM% 4/27 March -0.7% 3.4% GDP Annual QOQ% 4/28 4Q A 3.1% 1.9% Personal Consump. QOQ% 4/28 4Q A 4.0% 2.1% GDP Prices QOQ% 4/28 4Q A 0.4% 2.4% Core PCE Prices QOQ% 4/28 4Q A 0.4% 1.3% Initial Claims ,000’s 4/28 16-Apr 403 395 Cont. Claims ,000’s 4/28 9-Apr 3695 3680 BCCI 4/28 18-Apr -43 n/a Pending Homes MOM% 4/28 March 2.1% 1.7% Employ Costs QOQ% 4/29 1Q 0.4% 0.5% Pers Inc MOM% 4/29 March 0.3% 0.4% Pers Spend MOM% 4/29 March 0.7% 0.5% PCE Deflator YOY% 4/29 March 1.6% 1.9% Core PCE Prices MOM% 4/29 March 0.2% 0.1% Core PCE Prices YOY% 4/29 March 0.9% 0.9% U of Mich Conf. Index 4/29 April F 67.5 70.0 ===============================================================

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Something new has appeared at the Libyan front: a semblance of order among rebel forces.

Rebels without training _ sometimes even without weapons _ have rushed in and out of fighting in a free-for-all for weeks, repeatedly getting trounced by Moammar Gadhafi’s more heavily armed forces. But on Friday only former military officers and the lightly trained volunteers serving under them are allowed on the front lines. Some are recent arrivals, hoping to rally against forces loyal to the Libyan leader who have pushed rebels back about 100 miles this week.

The better organized fighters, unlike some of their predecessors, can tell the difference between incoming and outgoing fire. They know how to avoid sticking to the roads, a weakness in the untrained forces that Gadhafi’s troops have exploited. And they know how to take orders.

“The problem with the young untrained guys is they’ll weaken us at the front, so we’re trying to use them as a backup force,” said Mohammed Majah, 33, a former sergeant.

“They don’t even know how to use weapons. They have great enthusiasm, but that’s not enough now,” he said.

Majah said the only people at the front now are former soldiers, “experienced guys who have been in reserves, and about 20 percent are young revolutionaries who have been in training and are in organized units.”

The greater organization was a sign that military forces that split from the regime to join the rebellion were finally taking a greater role in the fight after weeks trying to organize. Fighters cheered Friday as one of their top commanders _ Col. Khalifa Hafter, a former senior figure in Gadhafi’s military _ drove by in a convoy toward the front.

It was too early to say if the improvements will tip the fight in the rebels’ favor. They have been struggling to exploit the opportunity opened by international airstrikes hammering Gadhafi’s forces since March 19.

In a sign the strikes may be eroding Gadhafi’s resilience, his government is trying to hold talks with the U.S., Britain and France in hopes of ending the air campaign, said Abdul-Ati al-Obeidi, a former Libyan prime minister who has served as a Gadhafi envoy during the crisis. “We are trying to find a mutual solution,” he told Britain’s Channel 4 News on Friday.

British officials met with Mohammed Ismail, a Libyan government aide who happened to be in London visiting relatives, and told him Gadhafi must quit, two people familiar with the issue said Friday. The two demanded anonymity to discuss details.

The opposition said Friday in Benghazi, its de facto capital, that it will agree to a cease-fire if Gadhafi pulls his military forces out of cities and allows peaceful protests against his regime.

The rebel condition is that “the Gadhafi brigades and forces withdraw from inside and outside Libyan cities to give freedom to the Libyan people to choose,” said Mustafa Abdul-Jalil, head of the opposition’s interim governing council. “The world will see that they will choose freedom.”

He spoke at a press conference with U.N. envoy Abdelilah Al-Khatib. Al-Khatib met Libyan officials in Tripoli on Thursday before holding talks with rebels in hopes of reaching a political solution.

The U.N. resolution that authorized international airstrikes against Libya called for Gadhafi and the rebels to end hostilities. Gadhafi announced a cease-fire immediately but has shown no sign of heeding it.

His forces continue to attack rebels in the east, which is largely controlled by the opposition, and have besieged the only major rebel-held city in the west, Misrata.

Misrata has been shelled by tanks and artillery for days, said a doctor in a city hospital who spoke on condition of anonymity out of fear of reprisals. Many people have been killed, including eight since Thursday, he said. He said Gadhafi brigades control the port and a main street, but rebels control the heart of the city.

At the main front, which has moved back and forth in a fringe between the rebel-held east and Gadhafi-ruled west, the rebels’ losses this week underlined the inferiority of their equipment, training and organization, compared to the regime’s.

There were signs of at least some rebel improvement in all three areas Friday.

The rebels had mortars, weapons they previously seemed to lack, and on Thursday night they drove in a convoy with at least eight rocket launchers _ more artillery than usual. The rebels also appeared to have more communication equipment such as radios and satellite phones. A newly installed diesel generator, allowing pumps at a gas station east of the main fighting, was another improvement.

They also appeared to get some international air support. Rebels east of Ajdabiya chanted “Allah akbar,” or “God is great,” as two planes flew overhead, and later eight to 10 heavy blasts _ more powerful than regular shelling _ were heard in the west, where Gadhafi’s forces were.

Rebels had pleaded in vain for international airstrikes much of the week. U.S. Joint Chiefs Chairman Adm. Mike Mullen said Thursday that most combat missions had been grounded by bad weather.

It was unclear where the front line was on Friday. A day earlier, the opposition moved into Brega, about 50 miles (80 kilometers) east of Ajdabiya, but were again pushed out by Gadhafi’s forces.

Ahmed al-Shiri, a 47-year-old former high-ranking officer from Benghazi, said Gadhafi forces were in Bishr, about 25 miles (40 kilometers) west of Brega.

NATO said it conducted a total of 178 flights, including 74 “strike sorties,” on Thursday, when it formally took control of what had been a U.S.-led military campaign against Gadhafi. The Obama administration, already fighting wars in two Muslim nations, had been eager to give up that responsibility.

The U.S. Defense Department announced it will end command missions in Libya on Saturday, leaving the work for other NATO members. The decision drew incredulous reactions from some in Congress.

The better organized rebel force took a long time to deploy mainly because it was being drawn up from scratch.

“We were setting up and training and establishing units all over Libya,” said Hamid Muftah, 41, a former member of air force now with the rebels. The volunteers got about 25 days of training and have been organized into six- or seven-member groups each led by a defector from the regular military.

“They’re still not that good, but they’ll get experience,” Muftah said.

“We can’t just do what we want now,” said Nasser Zwei, a 40-year-old oil engineer behind the wheel of an oil-company pickup truck, now equipped with an anti-aircraft gun. “We follow directions. It will make a difference.”

Now untrained fighters are turned away at checkpoints. They stay to the rear to hold the line temporarily in case Gadhafi’s forces attempt to flank the trained rebels, said Ali Bin-Amr, a 26-year-old fighter.

Al-Shiri, the former high ranking officer, said the improvements were set up over the past weeks. He blamed “lack of organization” for the rebels’ failure to reach Sirte, the Gadhafi stronghold they were marching on last week when they were turned back by an overwhelming force of artillery and rocket fire.

Now “we get orders from the military council in Benghazi. They’re in control. The army is in control,” he said. The undisciplined fighters “are not leading the way anymore.”

The international effort to stop Gadhafi from attacking his opponents is deeply divided on whether to arm the rebels, but they may soon get their own money to buy weapons. The opposition’s National Transitional Council has reached agreement with Qatar on a plan to sell rebel-held oil to buy weapons and other supplies, according to Ali Tarhouni, who handles finances for the council.

Gadhafi’s greatest losses this week were not military but political. His foreign minister and another member of his inner circle abandoned him Wednesday and Thursday, setting off speculation about other officials who may be next. The defections could sway people who have stuck with Gadhafi despite the uprising that began Feb. 15 and the international airstrikes aimed at keeping the autocrat from attacking his own people.

Libyan state TV aired a phone interview with intelligence chief Bouzeid Dorda to knock down rumors that he also left Gadhafi.

“I am in Libya and will remain here steadfast in the same camp of the revolution despite everything,” Dorda said.

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Soldiers and officials along a stretch of Japan’s northeastern coast warned residents that the area could be hit by another tsunami Monday and ordered them to higher ground. But the Meteorological Agency said there was no risk of another deadly wave.

The warning came as an explosion rocked the nearby Fukushima Dai-ichi nuclear power plant. The blast was felt 30 miles (50 kilometers) away by Associated Press journalists in the coastal town of Soma, where residents fled the town for safety after being herded quickly through muddy, debris-strewn streets.

TV footage showed a massive column of smoke belching from the Fukushima Dai-ichi nuclear plant’s No. 3 unit, about 125 miles (190 kilometers) north of Tokyo. Japanese officials said they believe it was a hydrogen explosion similar to an earlier one at a different unit in the facility. The problems at the plant stem from failed cooling systems caused by damage from Friday’s earthquake and tsunami.

More than 180,000 people have evacuated the area, and up to 160 may have been exposed to radiation.

Before the power plant blast, sirens around Soma, which was battered by Friday’s tsunami, went off and public address systems ordered residents to safety.

Farther south along the coast, helicopters flew over coastal communities warning residents to head to higher ground. In Sendai, the biggest city in the area, police announced warnings on a public address system.

In Tokyo and elsewhere, authorities began rolling blackouts to conserve power as they tried desperately to stabilize the nuclear reactors at risk of meltdown in the aftermath of the earthquake and tsunami. The disasters sent Tokyo’s stock market plunging as it opened, raising fears of a steep economic toll on top of the already overwhelming human suffering.

The planned blackouts of about three hours each in Tokyo and other cities are meant to help make up for the loss of power from key nuclear plants. Trade Minister Banri Kaieda said Sunday that the power utility expects a 25 percent shortfall payday loans guaranteed no fax.

Some 1.9 million households were without electricity, but many people were without even more basic necessities. At least 1.4 million households had gone without water since the quake struck, and food aid was slow in reaching many areas.

Friday’s quake and tsunami, which swallowed towns and tossed large ships like game-board pieces, caused tens of billions of dollars in losses, according to preliminary estimates. And the first day of stock trading since the disasters opening underlined the challenges Japan’s already fragile economy will have in bouncing back.

The benchmark Nikkei 225 stock average shed 494 points, or 4.8 percent, to 9,760.45 just after the market opened Monday. Japan’s central bank quickly responded by injecting 7 trillion yen (US$85.5 billion) into money markets.

The most urgent crisis remained at a nuclear plant along the ravaged northeastern coast, where operators worked frantically to try to lower temperatures of crippled reactors. Four nuclear plants had at least some damage, but two reactors at the Fukushima Dai-ichi nuclear complex were at the greatest risk of meltdown.

Operators dumped seawater into the two reactors in a last-ditch cooling effort. More than 180,000 people have evacuated the area, and up to 160 may have been exposed to radiation.

Officials have confirmed about 1,800 deaths from the earthquake and tsunami _ including 200 people whose bodies were found Sunday along the coast _ and said more than 1,700 were missing and 1,900 injured.

The death toll seemed certain to get much higher after a report from Miyagi, one of the three hardest hit states. The police chief estimated that more than 10,000 people were killed there, police spokesman Go Sugawara told The Associated Press. Only about 400 people in the state of 2.3 million have been confirmed dead so far.

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Spot the difference:

Economists wonder how Greece will ever pay off its enormous bills. Borrowing costs for Europe’s weakest states are at record highs. Credit downgrades come thick and fast while big question marks loom over the health of the region’s banks.

And the Germans are blocking any requests for more help.

Spring 2011 in Europe looks eerily like spring 2010 _ except that the stakes are now higher and markets’ patience appears to be reaching a breaking point.

The continent, especially the 17-nation eurozone, is still struggling to find its way out of a debt crisis that has already pushed Greece and Ireland to take massive bailouts. Investors are looking to the EU for a convincing plan that will keep the crisis from taking down Portugal and much bigger Spain _ a scenario that could threaten the future of the common currency.

Europe’s leaders have promised such a “comprehensive response” by the end of the month. The grand bargain was supposed to create closer coordination to boost economic growth and completely overhaul the region’s bailout fund, its main crisis tool.

But the mounting, uneasy feeling in markets is that the EU will fail to deliver.

“On every single occasion they have overpromised and underdelivered,” Sony Kapoor, managing director of the think tank Re-Define, said of Europe’s policymakers.

When the eurozone’s heads of state and government gather in Brussels Friday for a key stopover ahead of the decisive summit on March 24-25, they will commit to keeping labor costs and public deficits in check to make their economies more competitive and their government finances more sustainable. They will also discuss lowering the interest rates on Ireland’s euro67.5 billion ($93 billion) bailout and giving Greece more time to pay back its euro110 billion ($152 billion) rescue loan.

But the measures that markets have been waiting for the most _ namely giving the eurozone’s euro750 billion ($1 trillion) bailout fund powers that go beyond big national loan packages _ already appear to be off the table.

European Commission President Jose Manuel Barroso and his Monetary Affairs Chief Olli Rehn set the stakes high in January, when they called on EU leaders to not only boost the size of the fund, but also to widen “the scope of its activity.”

That scope, it soon emerged, could include buying the bonds of vulnerable governments to stabilize financial markets, giving countries short-term liquidity lines if they faced huge unexpected costs such as bank bailouts, or even lending governments money to buy back their own bonds and thereby cut down their debts.

The result was a period of relative calm on financial markets, which, policymakers said, should give Europe’s leaders the necessary time to rethink their crisis strategy. Until now it has largely been cobbled together in Sunday emergency meetings with the Monday opening of jittery stock markets in mind paydayloans.

But Barroso and Rehn may have promised too much.

Using the bailout money just to stabilize markets or buy up government bonds is “out of question,” a German government official said Thursday. Any help to troubled countries can only come as a last resort and in exchange for strict conditions such as budget cuts and structural reforms, the official told journalists.

About the jitters in financial markets following this week’s ratings downgrades of Spanish and Greek debt, the official said “I don’t think it can be about reacting to singular events.” He declined to be named in line with department policy.

The comments, in many ways, sum up what has happened in the eurozone over the past year.

On the one hand, much has been achieved. Governments bailed out Greece, set up the bailout fund that has since rescued Ireland, and even agreed to change the European Union’s treaty to create a permanent rescue mechanism. Record highs for bond yields and ratings downgrades are now received with a certain stoicism.

But on the other hand, the underlying clash of interest _ with the haves on the one side and the have-nots on the other _ remains.

“In the core countries the electorate is simply not happy to provide more help and funding to the periphery,” said Juergen Michels, an economist at Citigroup in London.

German Chancellor Angela Merkel faces an important election in the state of Baden-Wuerttemberg on March 27, just two days after the decisive summit. Elections in Finland, another fiscally strong country in the eurozone, are on April 17.

Together with the Netherlands, those two countries have formed a “coalition of no,” that looks set to block any expansion of the bailout fund’s powers, said Kapoor.

In some way, finding common ground is even harder now that voters in strong countries feel like they have already put up too much money, while citizens in weak states are reeling from the consequences of steep budget cuts and economic recession.

“The positions are more entrenched than they were last year, so the scope for action (for politicians) was much wider one year ago,” said Kapoor.

But most analysts nevertheless think that the euro will survive even if the “comprehensive solution” disappoints. “The lock-in of being part of the eurozone is so strong and the exit costs are so high,” said Kapoor.

And what might happen if the “comprehensive solution” fails to convince financial markets on March 25? The same as last year, a hastily called emergency meeting on a Sunday night, said Michels, possibly already on the first weekend of April.

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An elaborate sideshow got underway in New York Tuesday, breathlessly described by prosecutors as the biggest U.S. insider trading case ever involving a hedge fund.

The defendant is Raj Rajaratnam, 53, cofounder of hedge fund Galleon Group LLC, whose assets peaked at about $7 billion (U.S.) before the roof fell in on global financial markets in 2008.

Rajaratnam is accused of reaping about $45 million in ill-gotten gains from tips provided to him by corporate insiders, 19 of whom have been convicted of securities-law violations.

Rajaratnam himself faces as much as 20 years

Sanofi-Aventis is buying specialty drugmaker Genzyme for $20.1 billion, the latest example of a beleaguered pharmaceutical company snapping up high-priced biotech drugs to offset dwindling sales of older, simpler medications facing generic competition.

Sanofi, the world’s fourth-largest drug maker, overcame Genzyme’s reluctance to a takeover by raising its previous offer to $74 per share and agreeing to make additional cash payments pending the success of several drugs.

Wednesday’s announcement comes after nearly nine months of back-and-forth between the two companies, with Sanofi-Aventis finally deciding Genzyme’s portfolio of rare disease treatments was worth adding an extra $5 a share to its original $69 per share offer.

Genzyme’s shares rose 80 cents, or 1 percent, to $75.10 Wednesday.

The combination seems odd at first: a huge French company best known for vaccines used by millions of patients each year, buying a Cambridge, Mass.-based biotech company whose drugs are taken by only a handful of patients around the world.

But experts say the merger reflects the landscape of the pharmaceutical industry, as companies seek to replace older medications that have lost their patent protection.

“There’s a view among a lot of the pharma companies that biotech companies are particularly helpful in addressing the conundrum of patent expirations,” said Adam Berger, managing director with investment bank Leerink Swann.

By the end of 2011, medications worth more than $30 billion in annual sales industrywide will begin competing with low-cost generic drugs. Many of these drugs, developed in the 1990s, treat common diseases like arthritis, diabetes and asthma. Sanofi’s blood thinner Plavix, the second-best selling drug in the world, loses patent protection in 2012.

Compared with these pill-based drugs, Genzyme’s high-tech injectable drugs are virtually immune to generic competition. Not only are they extremely difficult to manufacture, but they enjoy extra patent protections awarded to encourage development of specialty medications.

Genzyme’s drug Myozyme, for example, is the only treatment for Pompe Disease, an often-fatal disorder that affects fewer than 10,000 patients worldwide. A year’s supply costs $300,000 for adults. Other Genzyme treatments range from $100,000 to $300,000 per year.

Large pharmaceutical companies stayed away from these so-called orphan drugs for decades, in part because of the negative publicity associated with their high prices. Industry observers say that trend is likely to change.

“This is a starting point where we could see other companies that have specialty pharmaceuticals becoming more attractive to large pharma,” said Jim Prutow, a consultant with PRTM Management Consultants.

The drought of new products has already spurred a string of mega-mergers, peaking with the 2009 combinations of Pfizer and Wyeth, Merck and Schering Plough, and Roche and Genentech low interest personal loan.

“While the world was dealing with financial crises, credit contractions and lack of confidence, biopharma was doing deals at a record pace because of the acute need for new products,” Berger said.

Sanofi-Aventis CEO Chris Viehbacher launched his hostile takeover bid for Genzyme last October, only to meet stiff resistance from Genzyme’s founder and CEO Henri Termeer. The two sides eventually softened their positions, with Genzyme opening its books to share confidential data earlier this month, signaling a deal was near.

“Biotechnology had never really been embraced by Sanofi-Aventis in the past and I think that proved to be a weakness of the company,” said Viehbacher, at a news conference Wednesday at Genzyme’s headquarters.

Termeer will step down as chairman and CEO of Genzyme following completion of the deal, but will keep a consulting role as co-chairman with Viehbacher of an integration steering committee.

Genzyme’s best-seller Cerezyme treats Gaucher disease, an enzyme disorder that can result in liver and neurological problems. Its second-best seller, Fabrazyme, treats an inherited disorder known as Fabry disease, which is caused by the buildup of a particular type of fat in the eyes, kidneys and nervous system.

The deal gives Genzyme shareholders one “contingent value right” for each share owned. These CVRs give holders the right to cash payments based on Genzyme meeting certain goals, including raising production levels for Cerezyme and Fabrazyme, getting final FDA approval for multiple sclerosis treatment Lemtrada, and higher sales targets.

Founded in the 1980s with a dozen employees, Genzyme grew into a biotech powerhouse in the 1990s after launching Ceredase, the first treatment for Gaucher’s disease.

By 2008 the company employed 12,000 people and reported sales of $4.6 billion, but a series of manufacturing stumbles the following year left the company vulnerable to takeover.

In June of 2009, the company shut down its Allston, Mass.-based plant for about three months to clean up viral contamination that had been slowing production of Cerezyme and Fabrazyme. The virus was not harmful to people, but the shutdown was costly. Then, in November of 2009, the FDA said it found tiny particles of steel, rubber and fiber in drugs made by Genzyme.

By December, Genzyme’s stock had fallen to $48 per share, down nearly 25 percent from the previous year.

__

Perrone reported from Washington, Keller reported from Paris.

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Newspapers are proving so resilient that the term

Canada risks losing the scientists and engineers needed to sustain its nuclear industry if the fate of Atomic Energy of Canada Ltd. remains uncertain, says the chief executive of Bruce Power.

Duncan Hawthorne told the Empire Club Thursday that the federal and Ontario governments should make it clear they

A majority of Americans are dissatisfied with the nation’s independent central bank, saying the U.S. Federal Reserve should either be brought under tighter political control or abolished outright, a poll shows.

The Bloomberg National Poll underlines the extent to which the central bank’s standing has suffered as it has come under fire in Congress, first from Democrats for regulatory lapses before the financial crisis and then from Republicans for failing to revive an economy in which the jobless rate hovers near 10 percent. Voters from both parties have criticized the Fed’s $3.3 trillion in aid to the financial system.

“The Fed had to do extraordinary things to keep us from going into a great depression, and the public doesn’t see it this way,” said Lyle Gramley, a former Fed governor who is now senior adviser at Potomac Research Group in Washington. “The last time we had any really severe criticism of the Fed was in the early 1980s, when the Fed was pursuing this brutally tight policy to keep inflation under control.”

The survey, conducted Dec. 4-7, also shows deep skepticism, especially among Republicans, over the Fed’s Nov. 3 announcement that it would buy bonds in an attempt to bring down unemployment and prevent deflation. More than half say the purchases won’t help the economy.

The policy, known as quantitative easing, was the target of criticism in Washington and overseas. That prompted Fed Chairman Ben S. Bernanke to appear in an interview on CBS television’s “60 Minutes” program on Dec. 5 to defend his actions.

Across the Spectrum

Americans across the political spectrum say the Fed shouldn’t retain its current structure of independence. Asked if the central bank should be more accountable to Congress, left independent or abolished entirely, 39 percent said it should be held more accountable and 16 percent that it should be abolished. Only 37 percent favor the status quo.

In a previous poll, conducted Oct. 7-10, 35 percent of Americans said the Fed should be radically overhauled, while 8 percent said it should be abolished.

Republicans and independents are more likely to support ending the Fed, with 19 percent of independents, 16 percent of Republicans, and 12 percent of Democrats wanting to do away with the central bank. Among those who identify themselves as supporters of the Tea Party movement, which wants to rein in government, 21 percent want to abolish the Fed.

Dual Mandate

The Fed was founded in 1913. While Congress sets its mandate, politicians let it determine how to achieve those goals through monetary policy and allow it to resolve differences of opinion among its seven board members and 12 Reserve Bank presidents.

Republicans in Congress have taken aim at the Fed’s dual mandate to achieve both maximum employment and stable prices. Last month, two Republicans, Tennessee Senator Bob Corker and Indiana Representative Mike Pence, proposed removing the employment mandate to focus the Fed on stable prices. Corker plans to introduce legislation next year.

That legislation would amend the Humphrey-Hawkins Full Employment Act of 1978, which created the Fed’s dual mandate.

Most members of Congress haven’t taken a hard look at the Fed in decades, said Representative Paul Ryan, a Wisconsin Republican in line to head the House Budget Committee. “They’re really beginning to wake up on this,” Ryan said in an interview.

Getting Politics ‘Out’

Pence, the outgoing chairman of the House Republican Conference, said his legislation doesn’t seek to abolish or politicize the Fed.

“Getting the Fed back to its original mission on price stability is precisely how we get politics out of monetary policy,” he said this week at a monetary policy forum in Washington.

Opponents of the central bank got another boost today when Representative Ron Paul, a Texas Republican and author of “End the Fed,” was picked to head the House Financial Services subcommittee that oversees the central bank. Paul said last week he is planning a series of hearings on U.S. monetary policy and wants to increase auditing of the Fed.

Senator Jim Bunning, a Republican from Kentucky completing his second term, called for restraints on the Fed in his farewell address today.

“Public awareness of what the Fed is doing is increasing while public opinion of the Fed is falling,” Bunning said. “Congress must act to rein in Chairman Bernanke and the Fed before they destroy our currency and permanently damage our economy and the financial system free business cards.”

Rare Appearance

Bernanke, 56, made his rare appearance on a nationally broadcast news program to explain his efforts to prop up a recovery so weak that only 39,000 jobs were created last month.

“We’re not very far from the level where the economy is not self-sustaining,” he said in the interview. “It’s very close to the border. It takes about 2.5 percent growth just to keep unemployment stable, and that’s about what we’re getting.” He said it’s possible the Fed will expand its bond purchases.

The Fed has said it would buy $75 billion a month of Treasury securities through June. That caused an uproar among Republicans, including Sarah Palin, the 2008 vice presidential nominee who says she’s considering a run for president in 2012.

Palin wrote to the Wall Street Journal last month, “it’s time for us to ‘refudiate’ the notion that this dangerous experiment in printing $600 billion out of thin air, with nothing to back it up, will magically fix economic problems.”

A ‘Myth’

Bernanke responded to such charges in his 60 Minutes interview, saying, “One myth that’s out there is that what we’re doing is printing money.” He added, “The money supply is not changing in any significant way.”

“The machinations of the Fed are not exactly a subject of water-cooler conversation — until newsmakers start talking about them,” said J. Ann Selzer, president of Selzer & Co., a Des Moines, Iowa-based firm that conducted the nationwide survey. “That talk has engendered a certain skepticism among the general public, many of whom may not see how this esoteric action by the Fed will ease their own pain.”

Fifty-four percent of those surveyed say the Fed’s policy won’t help the economy, compared with 25 percent who say it will. The remainder are unsure.

One poll respondent, Kathy Lipski, 34, said, “The Fed just has too much power or too much of a monopolized view, and I believe it needs some more oversight.” Lipski, who works for Honeywell International Inc. in Chicago, added: “It’s a good thing to have a separate entity as long as they’re acting in the best interest of the American people.”

Investors Skeptical

In a September poll of Bloomberg customers, investors were skeptical as well: Two in three said if the Fed were to ease monetary policy by buying bonds, it wouldn’t boost the economy, compared with one in three who were optimistic about the plan. By November, approval of the plan increased, with 41 percent optimistic and 56 percent saying it wouldn’t help.

The Standard & Poor’s 500 Index has risen 15 percent since Aug. 27, when Bernanke signaled the Fed’s willingness to begin a second round of quantitative easing during a speech in Jackson Hole, Wyoming. Investors’ expectations for inflation over the next five years have risen to 1.6 percent a year from 1.2 percent, as measured by the difference between the yields on inflation-protected and nominal bonds.

Still, the yield on 10-year Treasuries rose to 3.27 percent yesterday, the highest level since June, from 2.64 percent on the day of Bernanke’s speech.

Praising the Fed

Many observers have praised the central bank for steering the country away from the worst financial crisis in seven decades.

Fed officials “just did what they had to do to avoid a much more severe macro outcome,” said Roberto Perli, a managing director at International Strategy & Investment Group in Washington and a former Fed economist. “The Fed should quite frankly take credit for that.”

Bernanke personally is more likely to be viewed favorably than unfavorably. Thirty-four percent of respondents said they see him favorably, and 25 percent don’t. Forty-one percent said they weren’t sure.

He became chairman of the Fed in February 2006, after being appointed by President George W. Bush. He was renominated by President Barack Obama and confirmed for a second term in January 2010.

The Bloomberg National Poll is based on interviews with 1,000 U.S. adults age 18 or older and has a margin of error of plus or minus 3.1 percentage points.

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