If you think the U.S. economy is descending into a bottomless pit, hold off. But if you’re reasonably optimistic long-term, these banks are well worth considering for income-oriented investors.

After receiving hundreds of billions of dollars in taxpayer-funded federal bailout money, the biggest U.S. banks say they can’t track how that money is being spent. Some of the banks are outright refusing to discuss the matter, a new study has found.

Bank of American Corp. (BAC), which is getting $15 billion from the U.S. government as part of the Treasury Department’s $250 billion “recapitalization” effort, is doubling its stake in state-owned China Construction Bank Corp., and will hold a 20% stake worth $24 billion in China’s second-largest lender when that deal is finalized.

The Treasury’s plan to inject $250 billion in capital directly into US banks is underway. But William Patalon III says some of these taxpayer funds will be used by big banks to acquire junior competitors. This means the increase in lending that the plan is supposed to spark will be modest at best. And less competition in the banking sector could mean a rise in fees going forward.

Investors need a solid defense right now, says Martin Denholm. This means holding high-dividend stocks. Consumer staples and telecoms industries are the best places to cherry pick strong companies. For a lower-risk alternative, try these two high-dividend ETFs (AMEX:SDY, PEY).

Clean energy ETFs became hugely popular in 2007. But they’ve been taking a beating since this August, when crude oil prices began to fall from their year highs.

Nevertheless, Jim Stanton says alternative energy — and the wind-energy market in particular — has a big future. Wind energy is already the second largest source of new power generation in the US, and it now has the backing of the much-hyped Pickens Plan.

Jim says two clean-energy ETFs that look undervalued right now are PBW and GEX. He also recommends FAN for a more wind-specific ETF. 

Lehman Brothers (NYSE: LEH) has a lot to answer for… No sooner had I wrapped up this edition of “Sector Watch” than the company declared bankruptcy, thus forcing me into a swift re-write! So much for my plan to go fishing yesterday…

The Dow Chemical Co. (DOW) yesterday (Thursday) announced its plans to buy rival Rohm and Haas Co. (ROH) in an $18.8 billion deal, $3 billion of which will come from Warren Buffett’s Berkshire Hathaway Inc. (BRK.A, BRK.B). News of the Dow buyout sent Rohm and Haas shares soaring over 60% by midday in New York.