Here’s the short version of a panel on private equity at Davos today: smaller new deals, rising defaults on older ones but no re-run of the mass defaults of the 1980s.

“Those (big) buyouts will come back in time, but money over next few years will be made not by doing new deals, but by improving companies they already have,” said Carlyle Group founder David Rubenstein.

“There will be leveraged buyouts (in 2008), but deals will be smaller — most likely $1, 2, 3, 4 billion deals as opposed to $30 to 40 billion deals,” he said on the sidelines.

While there are some meaningful differences to the bad, old days - less aggressive structures and better resourced private equity firms - there are quite a few areas of concern.

The economy is turning sour, recent vintages of deals were highly leveraged in their own right and anyone hoping to refinance to buy time is likely to be disappointed. And while the lack of strong covenents on many deals will give them room to manoevre, eventually you gotta repay debt.

Still, we can all agree the next 18 months will be a very good test of private equity’s vaunted management skills. If they come through this with their reputations and returns intact, they will deserve all the praise they get.

Someone remind me to write a nice story if it happens.

James Saft is a Reuters columnist. The opinions expressed are his own.