Veteran dealmaker Joseph Perella, speaking at a forum on business risk hosted by insurance market Lloyd’s of London on Tuesday, said there is no overnight cure for the global economic crisis. 

And if a deep recession sets in things could get worse before they get better.

“The question of the day reamains where is the bottom,” said Perella, who founded corporate advisory firm Perella Weinberg Partners after  nearly 40 years in the banking industry.

In a severe recession, the benchmark Standard & Poor’s 500 Index could drop another 30 percent to 600, he said. So far this year, the S&P has fallen 42 percent, closing at 850.75 on Monday.

Declining stock markets would necessarily impact individual stocks. Perella said in the early 1970s he saw some companies valued as cheaply as four times earnings. He does not predict valuations will hit that rock bottom, but falling to a stock price of ten times earnings was feasible.

What is not realistic, he said, is average Wall Street expectations for 15 percent growth in earnings next year.

One more bit of “bah humbug.” Corporate default rates have yet to hit recession levels,  said Perella,  and he predicts more private equity deals will have to be restructured.

That last bit might not be so bad if you are in Perella’s business. Perella Weinberg has a restructuring group that has seen business surge in recent months.