Oil hits record $110 per barrel. Gold prices explode and nowexceed $1,000 per ounce. Storied investment firm Bear Stearnsdisappears over the weekend. The Federal Reserve dusts off arcanerules to create liquidity conduits. Real estate prices down by 33%in some markets.

Can it continue to get worse? Sure.

Higher fuel prices to decrease foreign oil dependencies. Lowergovernment farm subsidies anticipated by American farmer due tohigher food prices. Federal Reserve creative in attempt to staveoff financial meltdown. Home price declines offering new andmove-up buyers opportunities not seen in years.

Can it continue to get better? You bet it can.

An old colleague of mine used to frequently ask, "Is that thelight at the end of the tunnel or the train bearing down on me?"Given this market, the finance guy in me tends to be cynical,considering the breadth of the problems. However, when I look atlessons learned from events of the past 25 years, and the marketsentiment at the time of every ugly economic hiccup, the feelingwas always that it was a precursor to the next Great Depression.This cycle is no different and it will pass, sooner rather thanlater, with an environment that will enable stronger long-termgrowth.

History supports why I believe it's not as bad as the headlineswould have us believe. Our economy tends to be resilient, asevidenced by the series of events including Black Monday, Long TermCapital, the Russian debt crises, the technology market bubble,9/11, and two recessions since the mid 1980s. Excesses lead tocontraction, which leads to reaction, which leads to...and thecycle continues.

One of the most significant reasons for some balancedperspective is the way the Federal Reserve has injected liquidityand enabled access to credit at a time when the credit marketsvirtually shut down. Recognizing that record amounts of stimuluscan be a double-edged sword and may contribute to adverse long termimplications, given the task at hand, the Fed has done what isnecessary the past few months in being very proactive, and evencreative, in ensuring the contagion from the credit debacle doesnot lead to a full financial meltdown.

Widespread fear has engulfed all markets (equity, capital,commodities, and credit), driven by latest negative news. The mediaprovides streaming reports on each event, and every uptick anddowntick in the market. Information is shared immediately.Opportunists try and benefit from an event, markets of all typesmove, companies and institutions are affected, you and I talk abouthow much wealth is gained or lost, other interested parties watchand react (opportunists), and the cycle goes on....and that happensevery minute of every business day.

That goes on because the age of information and technologyallows us to hear and read about events as they happen. And, not todownplay the problems that exist today, but when negative news isspread across every newspaper and every newscast, it is hard tofeel optimistic. We all know that negative news sells.

The accelerated pace of information and data sharing has alsoled to shorter reaction times in addressing crises, which hasmitigated some of the potential damage. This helps bring somerelief, solutions and balance to the problems today.

While not perfect, the Federal Reserve, the U.S. government, theregulating agencies and other market leaders have acted decisivelyin recent months. The worst may not be over--we will continue tosee extreme volatility, but the attention from those who can exertthe proper remedies in a difficult environment have been welcomeand needed, and is having a beneficial impact.

Against this backdrop, credit unions are facing challenges.Delinquencies and charged off loans are increasing, the quality ofconsumer loan applications is eroding, loan volumes are lower andinterest rates are declining, which in many cases is impacting netinterest income.

Conversely, the opportunities for credit unions are in fact thebest they have been in years to improve performance and marketshare.

Deposit, and therefore asset growth in the first half of 2008,should be very strong and will likely be above trend for all of2008. With rates approaching a low point in the interest ratecycle, now may be a good time to offer competitive longer termcertificates--members will be attracted to the added yield. Lock inyour longer term fixed-rate funding and keep your member depositson your books for an extended period.

Credit unions can fill a void in the mortgage market and buildon our industry's paltry 2% market share by originatinghigh-quality loans and becoming the new mortgage lender of choice.While home values may be declining, strong underwriting, as hasbeen our industry's standard, will support a portfolio of credibleloans and strong relationships.

The yield curve is very positively sloped, and therefore offerssome opportunities to improve risk-adjusted returns relative to anypoint in the past few years. Depending on your balance sheet mix,capital position and risk, opportunities exist to deploy excessliquidity selectively in diversified, well-structured investments,as well as execute lower risk arbitrage trades (borrow short,invest short and capture the spread). These strategies have beenalmost nonexistent in recent years.

Capital levels are strong, member satisfaction remains high,balance sheets are comparatively well-positioned, and opportunitiesexist. While effectively balancing risk and reward, we need torecognize that with economic uncertainty, we have a uniqueopportunity to advance our cause and standing in the financialmarketplace and capitalize on our strengths with consumers.

No doubt there are still some economic bumps that lie ahead. Wewill get through those; we have every time before.

Optimist or pessimist? Choose a side. I'll continue to thinkpositively and believe it's light I see is at the end oftunnel.