You know to watch for phishing attacks, which use e-mail messages purporting to be from legitimate businesses to trick you into divulging private information. You’re cautious and use a good spam filter, but phishing messages still get through. And these messages are more dangerous than ever.

According to Cisco, almost 200 billion spam messages are sent daily. They have one thing in common: They want your money.

Most computer users can spot phishing messages. Unfortunately, cybercriminals have become more sophisticated, too. Targeted phishing attacks account for 0.4 percent of spam. That may seem minor, but it’s 800 million messages a day.

For example, you receive a message purportedly from your Internet service provider. It greets you by name and says your billing information is outdated. It says you must click a link to update your information. If you comply, your information will be stolen. This is the type of targeted attack you will see more of in 2009.

Phishing on the rise

Small phishing attacks don’t receive much publicity. And the scammers’ use of personal information to hook you increases trust. So, small, targeted attacks are often more lucrative than large ones.

Criminals can pull information about you from public sources, or someone may be tricked into disclosing it. Either way, it is used to tailor the messages.

You won’t see a long list of recipients in targeted attacks. You may also notice a difference in the sender’s address. Criminals used to spoof e-mail addresses. Spoofing is a quick, easy way to cover tracks. But spam filters can spot questionable e-mail addresses. Criminals now create new accounts with reputable providers. Or, they hack users’ e-mail accounts. This helps criminals get past spam filters.

People who do business with large financial institutions are still prime targets, but clients of small or regional institutions are also targeted, along with those of ISPs and alumni organizations.

Phishing messages generally request your personal information. They may also instruct you to install a fake security update or a malicious browser plug-in. Do that, and kiss your personal information goodbye.

Criminals reverse engineer updates to understand the flaws they fix. Then they start probing computers over the Internet for vulnerabilities. If you’re accessing the Internet without using a firewall to keep out intruders, keylogging software could be installed on your machine. Or, your computer could be added to a botnet, a group of compromised computers doing the scammers’ bidding.

Criminals get social

Criminals aren’t just targeting e-mail accounts. They’re also turning to social-networking sites. For example, a recent worm infected Facebook users’ computers with malware. Compromised accounts were then used to send spam.

There’s also the case of College Prowler. It created more than 300 Facebook user groups. The company was probably gathering information for marketing purposes.

College Prowler may be legitimate, but this case underscores one thing: Marketers and criminals alike will do anything to get your data.

Be vigilant

Your best defense is vigilance. Only a company run by dummies would request personal information via e-mail. It’s possible, but it’s unlikely.

Let’s say you get such a message. Hover your mouse cursor over any e-mail links. This will get you the real e-mail address. So, does your bank have a server in Bulgaria? Probably not. Better delete that e-mail.

You could receive a message purportedly from your boss. Why would he need your Social Security number at 3 a.m.? And why does he want you to reply to Outer Mongolia? At the least, talk to him before answering.

Standard security measures are still important. Keep your antivirus and anti-spyware software updated and running. Install Windows updates when they’re released. Criminals are exploiting disclosed bugs faster than ever.

Use a spam filter. You’ll find links to free spam filters and security software at www.komando.com/news.

But remember, you’re never 100 percent safe. Approach requests for personal information carefully. Don’t let criminals take advantage of you.

And do your friends and family a favor. Forward this column to them now. Wish them a less spammy 2009!

Kim Komando hosts the nation’s largest talk radio show about computers and the Internet. To get the podcast or find the station nearest you, visit: www.komando.com/listen. To subscribe to Kim’s free e-mail newsletters, sign up at: www.komando.com/newsletters. Contact her at gnstech@gns.gannett.com.

PHOENIX — Arizona Public Service Co. wants a license to continue operating the triple-reactor Palo Verde Nuclear Generating Station west of Phoenix for 20 years after its current licenses expire in 2025, 2026 and 2027.

The nation’s largest nuclear power plant would be more than 60 years old when the proposed license extensions run out in 2047.

Palo Verde’s three reactors provide electricity for as many as 4 million customers in California, Arizona, Texas and New Mexico served by seven utility companies.

The Dec. 11 application for a 20-year renewal was announced by the U.S. Nuclear Regulatory Commission on Wednesday.

The NRC downgraded the plant’s safety rating to the lowest of any of the nation’s 104 licensed reactors in early 2007 after a series of problems.

SAN FRANCISCO – For immigrants who send money to their home countries, wire-transfer shops are backbones of their neighborhoods. On some blocks in San Francisco’s Mission District, every third or fourth business might offer some sort of money transfer service, and they’re always bustling, even on a Sunday morning.

The customers probably don’t suspect one danger that apparently often lurks in the storefronts: a startling number of viruses on the computers used to transmit their financial information.

Some 60 percent of the PCs examined in a study of 300 wire-transfer businesses in Los Angeles and Las Vegas were infected with nasty viruses, according to a study due to be released Thursday by Spanish software vendor Panda Security.

The viruses Panda found included the worst kinds: keyloggers that record the users’ every keystroke, and other types of malicious programs that give hackers backdoor access to the compromised machines. Some infected machines held troves of private data, from Social Security numbers to credit card numbers to tax documents.

The study wasn’t able to determine whether any information had been successfully stolen because of the infections, which likely got onto the computers from everyday Web surfing by wire-transfer store employees. Researchers said the findings should serve as a warning that there are significant weaknesses in the shops.

“It’s a disaster waiting to happen,” said Carlos Zevallos, the lead researcher.

Wire transfers typically require that money senders provide limited personal information, such as a name and a telephone number. But the centers’ PCs were still rich sources of information because remittance shops are eclectic businesses. Although many are mere check-cashing places, with stark waiting rooms with no chairs and clerks behind bulletproof glass, others double as something else, selling everything from soccer jerseys, furniture and flowers to tax preparation and passport photos.

And when those side businesses operate on the same Internet-connected computers as the wire-transfer transactions, hackers might find a gold mine. Panda’s researchers believe the infections they discovered because of the remittance centers’ poor security controls could let criminals intercept money transfers — and cash them out themselves.

“It’s pretty chilling,” Zevallos said. “It’s the equivalent of having a store with a broken window in a bad neighborhood with a bunch of stuff in there — sooner or later someone’s going to come by and pick it up.”

Zevallos said the infections reflect what can happen when any business gives its employees unrestricted access to the Internet without proper security software and hardware. But remittance businesses or their customers might be especially vulnerable targets, given how much money they transfer. The Inter-American Development Bank estimates that remittances to Latin America and the Caribbean, mostly from the U.S. and Spain, will top $67 billion this year.

The money transfer industry played down the threat. David Landsman, executive director of the National Money Transmitters Association, pointed out that most transactions are for less than $300, which makes the hassle of intercepting a transfer and forging an ID and getting someone in place to steal the delivery potentially more costly than the crime is worth.

“If an identity thief is looking for waters to troll in, these would not be very rich waters,” Landsman said. “It’s not that we’re not concerned about our customers’ data being secured. We just don’t think this is a likely target. It wouldn’t make sense.”

Landsman said the industry’s security policies are sufficient. He noted that the big money-transfer companies are heavily regulated by state auditors, including their computer security. The money transmitters usually provide encryption technology and proprietary software on remittance agents’ machines, to shield the transfers themselves from prying eyes, though oversight after that is limited.

Indeed, the study didn’t find any weaknesses in the way the transfers themselves were handled. However, protections on those transactions might mean less if a hacker could log employees’ every keystroke.

Arizona Gov. Janet Napolitano's departure could bring big changes for the state.

Gov. Janet Napolitano’s selection for a job in Washington, D.C., may be secure, but her vision of a research-based economy in Arizona is no sure thing.

Napolitano has been a key figure in the state’s push to foster the biosciences since she became governor in 2003. She played a critical role in securing funding for the Translational Genomics Research Institute (TGen) and establishing Science Foundation Arizona.

But if she takes over the reins of the Homeland Security Department in Barack Obama’s administration, she will leave Arizona as the state faces a $1.2 billion budget shortfall this year and the Legislature is poised to make sharp cuts.

Fiscal conservatives may see biotechnology programs as a ripe target, which is making many bioscience and research boosters nervous. They insist that cutting research programs now would be a mistake.

“If this economic downturn does anything, it shows we must diversify our economy,” said John Murphy, president and chief executive officer of the Flinn Foundation in Phoenix. “The investments that have been made should be sustained.”

The state’s push to grow a bioscience economy has been ambitious.

Arizona and Phoenix combined have committed more than $1 billion to bioscience and research initiatives this decade.

A large chunk has paid for new research labs such as the TGen building in downtown Phoenix, the Biodesign Institute at Arizona State University in Tempe and Bio5 Institute at the University of Arizona. The Legislature this year also approved a stimulus package that would provide $470 million to expand the campus of the UA College of Medicine, in partnership with ASU, in downtown Phoenix.

Science Foundation Arizona secured a $25 million annual commitment over five years from the state Legislature provided that it raises an equal amount from private donors.

The funding commitment is subject to review each year, and groups such as the Arizona Federation of Taxpayers have targeted the foundation for cuts in past years.

The nonprofit foundation uses the state money to fund grants for everything from science education in high school to new research projects that cement ties between university researchers and large corporations in Arizona.

William Harris, the foundation’s chief executive officer, said the group already has secured its matching private funds for 2009 from a large base of donors. Harris realizes that Napolitano has been the foundation’s prime backer, but he also has high hopes that successor Jan Brewer, a fiscal conservative, will support the foundation’s goals of strengthening the state’s economy through targeted investments in science and research.

“We have to control our own destiny and get out of this ditch we’re in,” said Harris, who modeled the foundation after a similar group he led in Ireland. “We do that by diversifying our economy and strengthening our education in Arizona.”

Climate change

Napolitano’s departure could also portend a major shift in policy for one of her biggest local priorities: climate change.

Environmental groups, elected officials and other political watchers say that a new Republican administration would likely significantly reduce Arizona’s involvement in the Western Climate Initiative.

Napolitano was a founding member of the regional effort, which brings several Western states and a handful of Canadian provinces together to limit and reduce man-made greenhouse gases, among other things.

“As far as what I know about Jan Brewer, I would say she is probably not going to go along with (the WCI),” said Republican Rep. Ray Barnes, who serves as chairman of the House Environment Committee, adding that other priorities, such as dealing with the state’s billion-dollar budget deficit, would likely be higher on the new governor’s to-do list.

Education

Educators agree that Napolitano’s most substantial contributions were providing free full-day kindergarten, allocating new money to rebuild dilapidated buildings on state university campuses and preventing cuts to existing education budgets.

With Napolitano’s expected departure, some education leaders worry about keeping the gains made under her leadership, but many expect Brewer to be a similar, practical politician. Brewer has not been willing to talk about her role as governor or her education agenda.

“I’m sure Miss Brewer will have the best interests of the state at heart and a good agenda at all levels,” said Fred Boice, president of the Arizona State Board of Regents, which oversees the state’s three universities.

Michelle Catts, a resident inspector with the Nuclear Regulatory Commission, looks inside the turbine building during her inspection at the Palo Verde Nuclear Generating Station in Wintersburg in October.

WINTERSBURG – One of three reactors at the nation’s largest nuclear plant is shut down and could be for several weeks because of a cooling-system leak on the non-nuclear side of the plant.

Arizona Public Service spokesman Jim McDonald said there is no threat to public safety.

He said it could take weeks to repair the hydrogen leak because the turbine generator it is in is so large.

McDonald said the leak wasn’t a problem that had to be fixed immediately, but that APS chose to do it now because there’s low power demand, the other two reactors are at full power and it’s not a complicated problem.

APS and the plant’s other owners could buy replacement power from another source or get it from one of their other plants.

The East Valley Tribune will put more focus on its online edition beginning in January.

PHOENIX – A daily newspaper in suburban Phoenix stakes its future on a bold experiment in hopes of surviving a declining industry: reducing the number of publication days of its print edition while posting news on its Web site daily.

The East Valley Tribune, owned by Freedom Communications Inc., is the largest newspaper in the country to take this approach as the industry struggles with competition from Internet news sources, dwindling circulation, an economic downturn and slumping revenues from advertising, particularly classifieds.

“It wouldn’t surprise me to see more of this as the tsunami that has hit the newspaper business moves on,” said John Morton, a veteran newspaper analyst based in Silver Spring, Md. “It looks like conditions are going to be negative certainly through 2009 and perhaps through 2010.”

The approach intends to reduce the high costs of producing and delivering printed newspapers while retaining readers and advertisers as the industry moves deeper into online and niche publishing.

Two smaller newspapers in Wisconsin — The Capital Times in Madison and The Superior Telegram — have already made similar changes. Earlier this year, both papers went from six to two days a week with print editions and focused their daily news online.

The Capital Times, a paid paper that was converted to a free publication during the change, is delivered with a morning newspaper that has wider distribution. The Superior Telegram, which remained a paid newspaper, mails its print editions.

But the East Valley Tribune, with a combined paid and free circulation in excess of 100,000, will be the largest daily to take the leap when the changes go into effect in January. The Christian Science Monitor, with a circulation of about 50,000, next year will become the first national newspaper to drop its daily print edition and focus on publishing online.

The Trib, as locals call it, had a high water mark paid circulation of 94,500 in 1997. It competes in the Phoenix metro market with nearly 40 weeklies and the Freedom-owned Daily News-Sun in Sun City, but the longtime battle has been with The Arizona Republic, the nation’s 10th-largest newspaper and Gannett Corp.’s biggest daily besides USA Today.

N. Christian Anderson, an Arizona State University journalism professor and a former Freedom Communications editor and executive who had oversight over the Arizona newspaper, said a combination of factors prompted the changes at the Tribune.

The newspaper was suffering from the economic downturn and faced stiff competition for classified ads from Web sites. It also was considered a secondary advertising outlet, behind The Republic, that could be dropped by big retailers once things got tight economically. “It’s not a story that’s unique to the East Valley,” Anderson said.

Tribune Publisher Julie Moreno announced in October that the paper would cut 142 jobs, or 40 percent of its staff, by January. The paper will no longer be distributed in the affluent suburb of Scottsdale or Tempe, home to Arizona State University, or charge subscribers. Papers will be tossed onto driveways and stacked into free racks in four targeted, growing communities, Mesa, Chandler, Gilbert and Queen Creek.

“You give something up on the fringes to get more on the core,” said Jonathan Segal, president of Freedom Communications, which also owns the Orange County (Calif.) Register and 31 other dailies and 77 weeklies.

Freedom, based in Irvine, Calif., is a privately held company partly owned by two of the world’s largest investment groups, Blackstone and Providence Equity Partners.

Segal said Freedom may make similar changes at its other newspapers, but specifics would be dictated by the unique factors of each market.

Clayton Frink, publisher of The Capital Times in Madison, Wis., said changes at his paper in May weren’t intended to cut costs, but to raise the Times’ Internet presence and expand its circulation.

The Times had suffered falling circulation for at least five years, losing 500 to 1,000 readers each year before dropping to 16,500, when the paper decided to focus its reporting online and use the Web to promote its print editions.

Circulation has risen to about 85,000, now that it’s delivered by The Wisconsin Journal, the dominant daily newspaper. The Journal shares an advertising operation and splits revenues with The Capital Times under unique operating rules that are similar to — and yet still distinctly apart from — a joint operating agreement.

If the Times were a single-market paper without such an agreement, the online focus wouldn’t have made sense, since online ad sales, while growing, come nowhere near matching the proceeds from print ads, Frink said.

Three hundred miles away, in a northern Wisconsin town near the Minnesota border, The Superior Telegram began October offering more online content and reducing publication of its paid print edition from six to two days because of falling advertising revenue.

“It’s what the market can support,” said Ken Browall, the general manager of a newspaper group that includes the Superior Telegram.

Jobs were cut. Carrier delivery was eliminated. The paper is now mailed to readers.

The Telegram also considered eliminating the print edition altogether and becoming an all-Web operation, but kept the print edition because it’s still a large piece of its franchise, its older readership is fond of the print edition and some parts of its market are in rural areas with slow dial-up Internet connections.

Dumping the print edition is appealing because it would eliminate a large chunk of a paper’s expense base — newsprint, printing, and paying press operators and drivers, said Rick Edmonds, a media business analyst with the Poynter Institute in St. Petersburg, Fla.

But papers aren’t doing it because online advertising is a small piece of newspaper revenue, and it’s risky to remove the traditional link to readers, Edmonds said.

Edmonds believes the printed newspaper will eventually fade, but it will endure another 10 to 20 years to offer more analytical and investigative content.

Dick White, an East Valley Tribune subscriber and president of a group of religious leaders who lobby the Legislature on immigration, health care and education policies, said the newspaper has a strong record of digging deep into stories that matter to readers and that he is concerned the changes will lead to less scrutiny of government.

White said readers will suffer because the paper will report on fewer communities and journalists who seek deeper explanations and have developed expertise are being laid off. “This is a serious blow to the community’s ability to receive that kind of analysis,” White said.

———

On the Net:

East Valley Tribune: http://www.eastvalleytribune.com/

The Capital Times: http://www.madison.com/tct/

The Superior Telegram : www.superiortelegram.com/

PHOENIX — Two government agencies approved land agreements that have brought Arizona’s first wind-energy power plant a step closer to becoming a reality.

The first phase of the proposed Dry Lake Wind Project northwest of Snowflake is scheduled to open by 2010, with about 30 wind turbines generating 63 megawatts of electricity when the wind blows, enough for nearly 16,000 homes.

A second phase could bring an additional 200 or more turbines for a maximum capacity of 314 megawatts, which would provide enough electricity for 78,500 homes when the wind blows.

The Bureau of Land Management signed a right-of-way agreement and other documents for the wind farm, and the Arizona State Land Department signed a permit for the portion of the project that will use its rural property.

The BLM will earn $36,966 in leases on the project next year and should get $87,255 a year after that if the project develops as proposed.

State Land has a different deal tied to the amount of electricity generated at the plant, and could earn $4 million during the 50-year agreement, Commissioner Mark Winkleman said.

The developer, Iberdrola Renewables, also has a private agreement with the Rocking Chair Ranch to use some of its land. The ranch runs cattle on the public and private land in the area, but cattle operations won’t be affected by the development, owner Bill Elkins said.

Salt River Project, a Phoenix-area utility, has an agreement with Iberdrola to buy all the electricity from the wind farm.

Energy specialist Dave Fein, right, from Robison Oil conducts an energy audit at the home of Victor Nardulli in West Harrison, N.Y. The audit checked the combustion and distribution of the heating system. The home ability of the house to efficiently keep the heat in was also checked with the goal of saving the homeowner money.

Victor Nardulli and his wife, Mary Ellen, decided to have an energy audit performed after a discussion about their energy bills.

The West Harrison, N.Y., couple hired Comfort Save Solutions LLC of Elmsford, a subsidiary of Robison Oil Corp., to examine their 4,200-square-foot home in the hope of cutting their energy usage. The Nardullis, who live in the house with their two teen children, used about 1,200 gallons of oil last winter at a cost of nearly $4,000.

But Victor Nardulli, 45, said he and his family usually need about 1,400 gallons to get through a winter. They got a break last year because the winter was unusually warm.

Their costs could be higher this year. Their dealer (not Robison) recently told them they would pay a fixed price of $3.49 a gallon this winter. If their usage returned to its norm, they would spend $4,886 to stay warm between now and spring 2009.

But they hope their proactive stance will reduce those costs.

Robison, one of the largest oil dealers in Westchester County, started Comfort Save last year to help people improve their indoor air quality and find ways to reduce their energy consumption, said David Singer, president of Robison. But the company quickly found that saving money on energy was consumers’ top priority, he said.

The energy audits, which cost $69.99, have caught on fast, Singer said. Comfort Save, which started with one home assessor, now has five, he said. Each one conducts about 10 audits a week, he said.

Business opportunity

High energy prices, while a burden on homeowners, drivers and businesses, have provided an opportunity for savvy entrepreneurs who are able to help people find ways to save.

Peter Bell and two partners started Hudson Valley Energy Consultants Inc. in Mamaroneck nine months ago to perform audits of homes and businesses.

“We’re quite busy,” Bell said. “We get phone calls every day, and whenever something happens in the news (that indicates energy prices could head higher) we get a spike in phone calls.”

He said his company, which touts its accreditation from the Building Performance Institute, uses high-technology equipment such as thermal imaging cameras, which detect where heat is leaving a building due to a lack of insulation, leaky doors or windows or any other deficiency.

An audit costs $450, but the company does not sell products.

The company provides each customer with a list of energy-saving improvements and can refer the customer to companies that can provide the improvements.

Bell said he thinks that approach gives his company an advantage because customers cannot suspect that inspectors are exaggerating the deficiencies in their properties just to pump up product sales.

Singer said the Comfort Save assessors have found that about 65 percent of the homes they examine could benefit from some sort of energy-saving improvements. About half of those customers end up buying products from the company, he said. Though it’s not unusual for customers to spend up to $4,000, the average is probably about $1,500, he said.

The fee Comfort Save collects for an audit basically covers the wages of the assessor. Comfort Save makes its money if the homeowner buys products the assessor recommends.

Among the recommendations energy specialist David Fein made to the Nardullis was a microprocessor that fits on the boiler. He quoted a price of $950, but the installation costs can vary, driving the price as high as $1,250 in some homes.

The microprocessor, made by IntelliDyne LLC, gauges the temperature of the water as it leaves and then re-enters the boiler. It calculates the difference in those temperatures and signals the boiler whether it can run at a lower intensity.

The manufacturer guarantees it will cut 10 percent off the homeowner’s energy use, though Singer said there’s evidence it can cut 20 percent. A 10 percent cut would mean the Nardullis – who bought the microprocessor – would recoup their money in less than three years.

By the time the nearly two-hour audit was finished, Victor Nardulli had filled a page with notes on Fein’s recommendations. He said the next day he was pleased with the audit.

“Absolutely, we got a lot of new information,” he said. “We already started ordering a few of the items.”

DETROIT – Chrysler LLC said Friday it will cut 25 percent of its salaried work force starting next month, and the company warned that it will make more restructuring announcements in the near future.

CEO Robert Nardelli said in a statement that the moves are being made as the company “works to find new ways to operate.”

Chrysler, which has about 18,500 white-collar workers, also will cut a quarter of its contract employees, those who work for other companies under contract with the automaker.

About 5,000 workers are likely to lose their jobs, although the company would not say how many contract workers it has.

The company also said employees have been told to cut discretionary and overhead expenses and reduce capital expenditures not related to major products.

“These are truly unimaginable times for our industry,” Nardelli said in the statement. “We continue to be in the most difficult economic period most of us can remember. The combination of troubled financial markets, difficult credit, volatile commodity prices, the housing crisis and declining consumer confidence continues to weigh on the economy. Never before have auto industry sales contracted at such a fast rate,” he said.

Chrysler’s sales are down 25 percent through the first nine months of the year, the worst decline of any major automaker.

On Thursday, the company announced it will cut 1,825 jobs by eliminating one shift at a Toledo Jeep plant and accelerating the closure of its sport utility vehicle factory in Newark, Del., because of the slowing global economy and a shift toward smaller vehicles.

Chrysler’s owner, Cerberus Capital Management LP, is in talks to sell the company or merge with another. Discussions are under way with General Motors Corp. and the combined Nissan Motor Co. and Renault SA.

Kamlesh Raja, owner of Saxon Cards and Gifts in White Plains, N.Y., talks with Beth Pasmantier of White Plains as he rings up her greeting card early in October 2008. Raja says he is working 11-hour days to stay in business in these trying economic times. The one part-timer he has has gone from 30 hours a week to around 30 hours a month. He says his competitive edge is that he can offer a personal touch that larger stores like CVS don't have.

WESTCHESTER, N.Y. – Kamlesh Raja is making unpleasant choices in his business and in his personal spending in response to the economic crisis.

Raja, who owns Saxon Cards and Gifts in White Plains, said he recently slashed an inventory order and has reduced his only employee’s hours by about 75 percent. Cutting the worker’s hours means he has to work up to 75 hours a week.

“It’s longer hours and less money,” he said. “I’d love to cut out of here (the store) more, but I can’t afford to pay someone to work.”

He and his wife have stopped going to the movies and no longer make Friday evening trips into Manhattan for dinner with friends.

Raja has a lot of company. Businesses and consumers nationwide are paring spending in response to a global financial crisis that has slammed stock portfolios, wiped out once-powerful Wall Street firms and changed the shape of the presidential race.

Fear is up. Spending is down. Thriftiness is in. Shopping is out.

A private report released earlier this month said consumer spending, not counting autos, fell 2.4 percent in September on a seasonally adjusted basis. The SpendingPulse report by MasterCard Advisors may not capture the worst of the bad news. Consumer spending could fall by an even greater amount in October, a month in which stock losses have accelerated.

The austerity is both a symptom and a cause of a lousy economy. Consumers and businesses cut back because they lack confidence about the future. But when they cut back, business receipts decrease, making it harder for companies to pay workers, invest in inventory and equipment or, in some cases, survive.

Even in the wealthy suburbs north of New York City, folks are adjusting to a new economic reality.

Raja said he bought his store early this year but has figures showing how much business the previous owner was doing. Sales are off about 12 percent, he said.

Business has dropped even though he has added newspapers and lottery tickets to his product mix. He also has expanded the store’s hours.

“If I hadn’t done these things, I’d hate to think what my situation would be. It’s scary,” he said.

He and his wife, a microbiologist at a hospital in the Bronx, cut back on the dinners in New York City during the summer when gasoline prices were sky high.

“Now gas prices have come down, but the economy has gone crazy,” he said.

During the 1990s, stock prices soared and raised consumers’ spirits with them. Economists called the market’s impact on people’s psyche “the wealth effect.” Now shrinking retirement accounts are keeping people out of stores, restaurants and auto showrooms.

William Kellner, a medical writer from Yorktown Heights, said he’s nervous, “like anyone else with a 401(k) and money invested in the stock market.”

He’s becoming more cautious with his spending and is considering taking up coupon clipping.

“I was going to get a flat-screen, 32-inch TV, but I am more willing to wait than rush off,” he said. “It’s not an essential. It’s just something we don’t need. We can live with our 20-inch tube TV.”

Others are taking a hit from the housing slump. Jon Van Gorden, a Home Depot employee, will not be doing his part to spur the consumer economy because there is a big hole in his budget where his housing profits were supposed to be.

Van Gorden sold his three-bedroom ranch in Carmel in early September for $325,000 – $45,000 less than the asking price he set when he put the home up for sale in November 2007.

“The things I originally intended to do are not going to happen now,” he said. “My financial security is everything now. The money I intended to spend on the new place is going to be put in the bank.”

At Rockland Mattress on Route 59 in Nanuet, operations manager Gerard Restivo said business has been affected by the slowdown in home sales.

With fewer people buying and building houses, sales of home furnishings, such as mattresses and bedroom furniture, have taken a hit, Restivo said. It all means he is ordering less product.

“Most businesses today are not holding nearly the inventory they used to hold,” Restivo said.

Contributing: Allan Drury, The Journal News

By David Schepp, Julie Moran Alterio

Warren Buffett is back in the news with stakes in General Electric and Goldman Sachs, and advice to buy U.S. stocks. But as Buffett has generated headlines through the years, one factoid has gone largely unnoticed: He keeps an army of book authors employed and the publishing industry hungry for more.

There are 47 books in print, according to Books In Print, that have Buffett’s name in the title. Borders Books CEO George Jones says no other person alive, aside from U.S. presidents or other major world political figures, is named in so many titles, except the Dalai Lama.

To publishers, the 78-year-old Buffett has been hot for more than 15 years, and is gaining momentum. New books released in the last two weeks: “Pilgrimage to Warren Buffett’s Omaha: A Hedge Fund Manager’s Dispatches from Inside the Berkshire Hathaway Annual Meeting” by Jeff Matthews and “Warren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive Advantage” by Mary Buffett and David Clark. “Dear Mr. Buffett: What An Investor Learns 1,269 Miles From Wall Street,” by Janet Tavakoli, is racing to be the first Buffett book of 2009.

“The Snowball: Warren Buffett and the Business of Life,” which was released Sept. 29 to fanfare and fortuitous timing, has ambitions of becoming the best-selling Warren Buffett book of all time. It has 700,000 copies out and ranks near or at the top of most non-fiction bestseller lists.

“Snowball’s” list price is $35, not cheap, but owning the entire 47-book, 14,178-page Buffett library would cost more than $1,000, and that’s saving money buying the paperback versions when available.

Buffett sees it all as simple capitalism at work. “A market system ensures that anything will find a publisher if it can be written easily and will sell some minimum number of copies,” he says in an e-mail. “I just wish I had received a royalty on them all.” Then the man worth $50 billion adds parenthetically, “that is tongue in cheek.”

Buffett has a rare combination of financial genius and Midwestern approachability that offers “the charisma of movie stars” and the genuineness of “your favorite uncle,” says Peter Knapp, marketing director of business and finance books for Wiley.

He has hit the publishing sweet spot, and some authors say they have been pressured by publishers to get Buffett’s name or photo onto a book jacket.

Invoking his name for the sake of sales

One of the first authors to write a Warren Buffett book was Luki Vail, except that hers really had nothing to do with the chairman of Berkshire Hathaway. The book was first published in 1992 and republished in 1996 as “While Waiting to Win the Lottery! The Baby Boomers’ Money Manual.”

Two years later Robert Hagstrom was out with” The Warren Buffett Way,” and sales of that book were headed for 1 million copies when someone at Vail’s publisher found a reference to Buffett embedded deep inside her personal finance book. It was a one-paragraph anecdote squirreled away in Chapter 25 that had nothing to do with investing. But it was enough to get Vail’s 1996 edition renamed without major revision: “Invest Like Warren Buffett, Live Like Jimmy Buffett: A Money Manual for Those Who Haven’t Won the Lottery.”

“Nobody can invest like Warren Buffett. Warren’s Warren,” says Vail, now a semi-retired financial planner in Carlsbad, Calif.

Even with two Buffetts in the title, it never sold well, Vail says, not even when Jimmy Buffett (the laid-back singer friend of Warren Buffett, who is no relation) stocked it at his Margaritaville store in Key West, Fla. It’s out of print and not among the 47.

When Randy Cepuch submitted “Nose Under the Tent: Adventures at Shareholder Meetings,” his publisher, Thunder’s Mouth Press, persevered on a name change to “A Weekend with Warren Buffett: And Other Shareholder Meeting Adventures.” Cepuch yielded because the first chapter is about Berkshire Hathaway’s annual meeting, although subsequent chapters are about meetings at other companies, including Citigroup, Google and Gannett, parent company of USA TODAY.

Before changing the name, Cepuch got Buffett’s permission. Cepuch balked when Thunder’s Mouth Press wanted a photo of Buffett on the cover. Cepuch says he insisted on “more generic artwork.”

A 10.2-pound Warren Buffett book

“Snowball,” the decade-long work by former insurance industry analyst Alice Schroeder, is meaty at 976 pages and ships at 3.6 pounds. But the length record is still held by “Of Permanent Value: The Story of Warren Buffett,” which Andrew Kilpatrick revises every year or two. It weighs in at 10.2 pounds, 330 chapters, 1,874 pages and 1,400 photos. The $60 book is two volumes and nearly 400 pages longer than “War and Peace.” It’s so cumbersome that travelers at Eppley International Airport in Omaha — home of Berkshire Hathaway — often have it shipped home, says Jim Ross, manager of the Hudson Booksellers store inside the terminal.

The 47-book library does not double-count revised editions, or any book republished in paperback, nor audio, large-print or eBooks. It does not count foreign-language editions, although Buffett is such an international sensation that translations begin as soon as the English version is edited. “The Tao of Warren Buffett: Warren Buffett’s Words of Wisdom,” has been published in Chinese, Russian, Hebrew, Arabic and 13 other languages, says author Mary Buffett, who divorced Warren Buffett’s son Peter in 1993 and has co-authored five books that have the name of her former father-in-law in the title.

Warren Buffett’s personal favorite? “The Essays of Warren Buffett,” by Warren Buffett, which he says is “a coherent rearrangement of ideas from my annual report letters” as edited by Larry Cunningham.

There seems to be a Buffett book for everyone. Even for those more interested in the Dalai Lama than the Oracle of Omaha, there’s “Warren Buffett and Tao Te Ching: A Modern Investor and an Age-Old Philosophy.” Author Yingpei Zhang of San Antonio says he has no reason to believe that Buffett has read the ancient text by Lao Tzu, but decided that great minds think alike. Buffett must have independently found an Eastern-like path toward riches by mastering “desirelessness and inactivity, thrift and non-competition,” Zhang says.

That may be another way of saying: Buy companies at a bargain and hold them for the long term. Indeed, the new “Snowball” book is named for a Zen-like Buffett quote: “Life is like a snowball. The important thing is finding wet snow and a really long hill.”

Zhang has sold about 100 copies of his self-published book. Others have done better. Publishers are reluctant to “fess up their sales figures,” Knapp says, but “Warren Buffett Speaks: Wit and Wisdom from the World’s Greatest Investor” by Janet Lowe has sold about 200,000 copies, as has Roger Lowenstein’s 1995 “Buffett: The Making of an American Capitalist,” which was long considered to be the best Buffett biography written. Schroeder says Lowenstein’s was the only book she relied on when writing “Snowball” because he interviewed people who have since died.

“Buffett’s a star in a very arcane area of disciplined investing that average people don’t understand,” Lowenstein says. “He articulates it in a way that they do understand. He’s the Ann Landers of investing.”

The No. 1 Buffett book that “Snowball” aims to beat is Hagstrom’s “The Warren Buffett Way,” which is at 1 million copies and still selling. Mary Buffett estimates total sales of her books at more than 1.5 million worldwide, including 1 million total for her two “Buffettology” books.

Bantam Dell Publishing never confirms book advances, but they paid more than $7 million to publish “Snowball,” according to The Wall Street Journal. Bantam is calling Schroeder’s book the first one written with Buffett’s cooperation.

“I don’t think you will find any other authors who have interviewed him,” says Schroeder, who has 300 hours of recorded interviews and spent many other hours observing him working.

Buffett says it’s a “good book,” but he tires of people referring to “Snowball” as “your book,” and he often has to explain that Schroeder was responsible for the content. “I cooperated with Alice, but I was not a collaborator,” Buffett says.

Other authors say that their books were not written in a vacuum. Mary Buffett says that she had access for 12 years as a member of the family spending summer vacations in Omaha and at family Thanksgiving and Christmas reunions in California. She describes her relationship with Warren Buffett as “friendly,” although he has never included any of her books to be sold at Berkshire Hathaway annual meetings.

” I couldn’t tell you exactly why or why not,” says Philip Black, owner of The Bookworm in Omaha, who each year gives Buffett a list of books available. Buffett approves about 25 offered to 25,000 shareholders at the convention center in Omaha.

Buffett has been known to drop authors a line

Other authors say that Buffett seems tickled when he receives manuscripts and writes gracious notes of encouragement and suggestions. Cepuch says Buffett saved him from embarrassment when he corrected a corporate homonym from Coke to Koch.

“I talk to Buffett on a regular basis,” says Lowe. “He’s been very kind and generous and willingly signs copies of my book for those who ask.”

Lowe says she once got a note from Susan Buffett, Warren Buffett’s first wife who died in 2004. “She said my book most accurately reflected the Warren that she knew,” Lowe says.

Kilpatrick self-publishes and sells about 2,000 copies a year, about 200 to 300 of those at the Berkshire Hathaway annual meeting. He says he has read every word of other Buffett books, many of them two or three times. He often gets calls from publishers, but conversations are short because he refuses to trim his 1,874-page “labor of love.”

Once a publisher wanted Warren Buffett as the first two words in the book title. Kilpatrick insisted on Of Permanent Value, a deal breaker, he says.

“From a sales standpoint, that’s probably a mistake,” but Kilpatrick says he gets intrinsic value each time he revises “Of Permanent Value: The Story of Warren Buffett” and sends a fresh copy off to Buffett in Omaha.

Kilpatrick gets a short note back from Buffett, usually saying something like: “Too skimpy.”

The hunt for scapegoats in the financial crisis focused firmly on credit ratings agencies Wednesday as U.S. lawmakers probed how the firms gave top ratings to debt that later turned out to be toxic.

The three leading agencies – Moody’s, Standard & Poor’s and Fitch Ratings – are considered key financial gatekeepers because they issue ratings that determine if a company is worth lending to, and at what cost. However, in recent years the agencies gave triple-A ratings to complex financial instruments backed by subprime mortgages. When the real estate market collapsed, the securities did too, triggering a domino effect that led to the worst financial crisis since the Great Depression.

“One reason why we had financial panic is because investors lost faith in the system. If you can’t trust the gatekeeper, who can you trust?” says Douglas Diamond, professor of finance at the University of Chicago’s Graduate School of Business.

The industry’s three top executives – Moody’s CEO Raymond McDaniel, S&P President Deven Sharma and Fitch Ratings CEO Stephen Joynt – testified before the House Committee on Oversight and Government Reform on Wednesday. All three admitted some responsibility for the crisis when District of Columbia Delegate Eleanor Holmes Norton asked, “Do you think your companies are responsible?” Fitch’s Joynt said: “We weren’t able to project forward … and in that sense contributed to the crisis.”

Committee Chairman Henry Waxman, D-Calif., said his investigators had obtained documents showing executives knew the subprime mortgage market was weak before it collapsed. One e-mail from an unnamed Moody’s employee said that some of the firm’s mortgage-based securities ratings made it appear that either they were “incompetent at credit analysis,” or that “we sold our soul to the devil for revenue.” Another from an S&P employee said: “Let’s hope we are all wealthy and retired by the time this house of cards falters.”

Sharma said there was no evidence of misconduct by S&P’s analysts or that the integrity of its ratings process was compromised. “All of us looked at house price declines and we didn’t assume they would be as severe as has occurred,” he said.

Critics say one big problem was that the agencies were paid by the very firms whose debt they were rating, and high ratings made the debt easier to sell. “When the referee is being paid by the players, no one should be surprised when the game spins out of control,” said Christopher Shays, R-Conn. Moody’s McDaniel defended the system. “The biggest mistake we could make is believing that an investor-paid model doesn’t invite conflicts of interest,” he said. “The question is, can we manage the conflicts properly?”

The deep economic crisis has more lenders willing to change mortgages or repayment schedules for homeowners at risk of default to stem their potential losses from foreclosures.

More than 3 million U.S. homeowners have received — or are expected to receive — more affordable loans through ongoing programs initiated over the last 15 months.

But even outside the formal programs, says David Kittle, chairman-elect of the Mortgage Bankers Association, lenders are more willing now than a few months ago to agree to changes in monthly payments. In some areas that have a high number of subprime loans or foreclosures, he says, some lenders are even going door-to-door to contact homeowners.

“There’s really no reluctance anymore,” Kittle said. “Lenders lose $40,000 to $50,000 on every loan that goes into foreclosure.”

Kathleen Day of consumer advocate Center for Responsible Lending says even with banks more willing to make modifications, additional help is needed. She also said door-to-door contact with late borrowers may be little more than a public relations ploy.

Some lenders had been reticent to do loan work-outs because they may hold a large number of risky loans, and modifications carry their own costs to banks. Others simply lacked the staffing or internal programs for systematic loan reviews.

Signs of the shift:

— Mortgage servicers have modified existing mortgages or agreed to easier repayment plans, allowing 2.26 million homeowners avoid foreclosure since July 2007, according to Hope Now, a private sector alliance of mortgage servicers, counselors and investors.

— As many as 400,000 homeowners may avoid foreclosure over the next three years under a program that started Oct. 1 through the Federal Housing Administration. The program, authorized by Congress in July, allows qualifying homeowners to refinance loans into a 30-year, fixed rate. The mortgage must have originated on or before Jan. 1, 2008.

— Nearly 400,000 homeowners will be able to get more affordable loans under an agreement this month by Bank of America with a number of state attorneys general to modify mortgages originated by Countrywide Financial, now owned by the bank.

Despite banks’ forbearance, foreclosure filings are rising, according to the most recent reports. Foreclosure activity increased 12 percent in August from the previous month and 27 percent from August 2007, according to industry watcher RealtyTrac. Last year saw 2.2 million foreclosure filings.

ORLANDO, Fla. — Main Street USA in Walt Disney World’s Magic Kingdom seems far, far away from the meltdown on Wall Street.

Children hug Winnie the Pooh. At Town Hall, the mayor sings, “Supercalifragilisticexpialidocious”. Yet Wall Street’s financial mess has touched even this idyllic world.

The natural gas that cooks the food on Main Street USA was one of the many things that Wall Street bought and sold with borrowed money. The gas deal went belly-up in September, costing investors $700 million when Lehman Bros. failed. Now, it will cost more for Disney to light the flame to roast the chicken to feed the children at the Crystal Palace.

Wall Street’s financial crisis flows to Main Street in unexpected and sometimes imperceptible ways. The same bum deal that will raise Disney’s natural-gas costs will make it more expensive to buy electricity for residents on Main Street in Tallahassee.

It also cut the value of a dozen mutual funds that lent the money for the deal. And it put a team of bankruptcy lawyers to work in New York and Atlanta.

The tale of Main Street Natural Gas Inc. — the sponsor of the obscure financial deal that failed — reveals how risky investments flourished in an era of easy credit and how everyday people are now paying the price.

It’s a story of how $700 million was vaporized in just a few months, and of how the deal’s investment bankers got paid while investors and consumers got stiffed.

“I feel badly about the investors who lost money and about losing a cheap supply of natural gas,” says Arthur Corbin, chief executive of Main Street Natural Gas of Kennesaw, Ga.

The financial system is staggering under the weight of Wall Street-manufactured debt that cannot be repaid.

Main Street Natural Gas’ $700 million is a small but revealing part of that problem. Losses on home mortgages alone will reach $1.4 trillion, the International Monetary Fund estimates. Financial institutions are suffering additional losses on home equity loans, student loans, credit cards and other debt.

The details can seem complex when buried in the language of finance — leverage, derivatives, credit default swaps.

Yet, at the core, the deals were simple: Banks and investors borrowed trillions of dollars and bet the money — on home values, natural-gas prices, the probability of bond defaults.

Main Street Natural Gas was typical. It put none of its own money into the $700 million deal. Every penny was borrowed, even the millions paid to the investment bankers. Main Street Natural Gas will lose nothing in the failed transaction.

Instead, the lenders — mutual funds, insurance companies, individual investors — will take the hit.

Long-term promises

Main Street Natural Gas is part of the Municipal Gas Authority of Georgia, a government agency established by the Georgia Legislature 20 years ago to buy natural gas for city-owned utilities that now serve 243,000 customers.

A few years ago, investment bankers from several Wall Street firms approached the authority with a plan to help the agency lock in cheap supplies of natural gas for decades.

The idea: Borrow money at low, tax-exempt interest rates available to government and give the money to the investment banks. The banks would use this inexpensive debt to invest for a profit and, in return, supply natural gas at a below-market price.

In November 2006, the Municipal Gas Authority of Georgia set up Main Street Natural Gas as a non-profit corporation to do the Wall Street deals.

Main Street’s sole purpose was to borrow money to buy natural-gas derivatives — contracts that bet on the future price of natural gas.

“A bond lawyer suggested naming the company after ‘Main Street’ because that’s who we were serving,” says Corbin, who is also chief executive of the Municipal Gas Authority.

The goal was to secure an inexpensive, long-term natural-gas supply for 73 municipal-owned utilities, including the government district that serves Disney World.

In April, Main Street borrowed $700 million and gave it to the Lehman investment bank. In return, Lehman promised to arrange delivery of 160 billion cubic feet of natural gas over 30 years at a below-market price.

That’s like a taxi driver borrowing $7,000 and giving it to a man who promises to supply gasoline for the next 30 years at 50 cents per gallon less than the market price.

The long-term savings would be huge — if the fellow who got the cash doesn’t go out of business.

Lehman filed for bankruptcy Sept. 15, having delivered less than 1 percent of the promised gas.

The fate of the $700 million?

It’s in a pool with the rest of Lehman’s assets. The money will be spent repaying Lehman’s creditors, not buying natural gas.

Main Street Natural Gas’ lenders are standing in line with other unsecured creditors, hoping to get 30 percent to 50 percent of what they are owed. The bonds they purchased to help finance the natural-gas deal now sell for 5 to 15 cents for every dollar of original value.

City put in money bind

Main Street Natural Gas took advantage of the grand innovation of this Wall Street era: using borrowed money to acquire an asset while transferring risk to others.

Like a homeowner who puts zero-money down, the investor looks smart when the risky deal starts off great.

But things often end badly.

Main Street Natural Gas did its first deal in January 2007. Within 16 months, it borrowed $2.2 billion by issuing tax-exempt bonds and gave them to Merrill Lynch, J.P. Morgan Chase and Lehman.

Main Street planned to borrow more but couldn’t when the financial markets came to a standstill.

The investment banks sold Main Street’s tax-exempt bonds to investors, mostly mutual funds, insurance companies and wealthy individuals. The investment banks kept the cash and promised to deliver natural gas at below-market prices.

The Lehman deal would have saved the municipalities about 10 percent of the cost of natural gas.

That promise thrilled officials in Tallahassee.

The city has some of the highest electricity prices in Florida. It operates natural-gas electric plants that consume more than $200 million in fuel a year. The Lehman deal would have supplied enough fuel to save the city $3 million a year.

“It was a nice program,” Tallahassee treasurer-clerk Gary Herndon says. “We saved money and had no liability.”

Now, the city will pay a price.

Since Lehman went bankrupt, the city has been forced to purchase natural gas at higher prices. The city raised electric rates 8.3 percent this month, citing higher fuel costs, to an average rate of $158 per month for residential customers.

The higher electric costs will trickle down to all Florida taxpayers. The city’s biggest electric customers: Florida State University and Florida’s state government.

The Reedy Creek Improvement District — a special government district that contains Disney World outside Orlando — was the second-biggest buyer of natural gas in the deal.

“It was an excellent position for us to be in — cheap gas and no obligations,” district administrator Ray Maxwell says.

The natural gas would have been used to generate electricity and supply natural gas for cooking at Disney, he says.

“There’s lots of natural gas out there to buy. That’s not a problem,” Maxwell says.

“We just won’t have a long-term contract and as good a price.”

‘Great tool’ — or ‘toxic’?

Investors took the loss.

The Franklin Federal Tax-Free Income Fund, for example, bought $25 million of the bonds sold by Lehman.

The interest rate was attractive — as high as 6.6 percent annually through 2038 — and interest payments were exempt from federal income taxes.

The mutual fund lost about $22 million on the Main Street bonds, based on their current market value. That’s equal to a dent of about one-third of a percentage point in the value of the $6.6 billion fund.

Fidelity, Morgan Stanley, Oppenheimer and Nuveen were among the other mutual funds to buy the bonds, according to Securities and Exchange Commission records.

Natural-gas derivatives “can be a great tool if used appropriately,” says economist Thomas Lee of the federal Energy Information Administration. “They also can be very dangerous and toxic. The key is to know what you’re doing and not cross the line.”

Natural-gas derivatives are financial instruments — options, futures contracts, swaps — that are commonly traded on the New York Mercantile Exchange and elsewhere.

In these deals, investors promise to buy or sell natural gas sometime in the future at a specific price.

For example, a contract may call for the purchase of natural gas for $8.25 per million British thermal units (mBtu) in 2013. If the market price of natural gas is $15 per mBtu in 2013, the derivative is a big-time winning bet. If the price is $7.21 per mBtu (the market price Tuesday), the derivative is a money loser.

Lehman commodity traders had the job of betting the $700 million in a way that was profitable for the investment bank and delivered the natural gas to Disney World and Tallahassee when it was due.

Main Street Natural Gas’ deal was riskier than ordinary natural-gas derivatives because it placed the entire bet with one company: Lehman.

As it turned out, the deal was a $700 million bet on the financial health of Lehman.

Federal law opened the door

Federal tax law encouraged the deal.

Lehman obtained inexpensively borrowed money by using the tax-exempt status of Main Street Natural Gas.

This borrowing technique had been uncommon until a few years ago because of questions about its legality.

Then the Energy Policy Act of 2005, a 1,700-page energy bill supported by Congress and President Bush, confirmed that tax-exempt borrowing to obtain a long-term energy supply was legal.

Investment banks took advantage of this access to tax-exempt money to raise billions of dollars to bet on the derivatives market.

Lehman was counting on its low cost of borrowing $700 million, plus its investment prowess, to generate enough cash to cover the natural gas it had promised.

For its no-risk role as a tax-break vehicle, Main Street Natural Gas would earn an administrative fee equal to about $4 million over the life of the deal, according to the bond contract. That $4 million would provide earnings to help its parent, the Municipal Gas Authority of Georgia, keep natural gas prices lower for the customers of municipal utilities.

Lehman’s bankers, bond lawyers, the bond rating companies and others took home about $4.5 million in April from the bond issue.

Main Street’s tax-exempt status would have saved investors — and cost the U.S. Treasury — about $300 million in taxes over 30 years, if the deal hadn’t gone bust.

“Lehman Bros. was a highly rated firm,” Corbin says.

“We were talking to them right up until they declared bankruptcy.”

In April, when the bonds were sold, Lehman stock was trading for about $40 per share. Credit rating agencies gave the bonds good ratings based on the creditworthiness of Lehman, a firm that traced its roots to the cotton trade in the 1840s.

“Every time you borrow money,” Corbin says, “there’s some risk.”

Hitting close to home

At Walt Disney World, the price of roasting chicken at the famous Crystal Palace on Main Street USA is likely to cost more soon.

“It’s all very expensive but all very wonderful,” says Sandra Rodriguez, an Indianapolis mother who ate at the restaurant with her two children.

When she returns home, Rodriguez and her husband will have to find new jobs. They both were laid off from jobs in the homebuilding business.

“Wall Street problems have affe

NEW YORK — Years from now, it might be remembered as a legendary market call from an investing legend — the mother of all buy signals.

But for now, with the stock market one of the scariest places on Earth, it’s simply a bold call, albeit one grounded in well-established investment theory. But it’s a call that even the most committed long-term investors may not have the guts to execute on their own.

Warren Buffett, the billionaire investor who has made his fortune buying stocks when he thinks they’re on sale, says he’s buying U.S. stocks, currently marked down 40 percent, for his personal account.

He told the world Friday in an op-ed piece in The New York Times under the headline, “Buy American. I Am.” He acknowledged that the financial world “is a mess,” and headlines are “scary” and will stay that way for a while. He said he has no idea if stocks will be higher or lower a month or a year from now.

“Bad news is an investor’s best friend,” he wrote. “It lets you buy a slice of America’s future at a marked-down price.” Cash, he said, is not the haven people think it is. Policies to fix the system will be inflationary and erode the value of cash.

Despite Buffett’s declaration, the Dow Jones industrials fell 127 points to 8852.

Should individual investors buy stocks? “If you have market staying power, this is the time to listen to a guy like Buffett,” says Timothy Vick, author of “How to Pick Stocks Like Warren Buffett.”

But there’s a catch: Buffett has billions to ride out the financial storm if it gets worse. Mom-and-pop investors don’t. Says Vick, “Can you outlast what the market might throw at you?”

A simple rule, Buffett says, dictates that he buy now: “Be fearful when others are greedy, and be greedy when others are fearful.”

Buffett’s public market calls are rare. In 1974, when stocks were nearing the end of a 48 percent drop, he said, “Buy.” The Dow soared for two years. In the late 1990s, he warned folks to avoid tech stocks. The Nasdaq plunged nearly 80 percent from 2000 to 2002.

Buffett isn’t trying to time the market. He’s looking five, 10, 20 years out and wants to get in before prices rebound. “He sees value,” says Kurt Brouwer, chairman of investment firm Brouwer & Janachowski.

Stocks are getting cheap. The Standard & Poor’s 500 index trades for 9.7 times estimated 2009 earnings. That price-earnings ratio is nearing the P-E of 7 that was hit at the bottom of the 1973-74 bear market, says InvesTech Research. Stocks are now cheaper than they were after the 1987 crash.