When getting the pulse on the credit markets, the private equity firms have a good sense of things. Credit is the lifeblood of the business. And, of course, the credit freeze has essentially stopped private equity activity.

But, according to some veteran private equity dealmakers, it does look like things are stabilizing. For example, the Blackstone Group LP's (NYSE: BX) CEO, Stephen Schwarzman, is optimistic that the environment is improving. The main reason: the massive government interventions.

And, this week we also got KKR's chief, Henry Kravis, to chime in. However, his sentiments are somewhat qualified. After all, he thinks that the real economy is in a fragile state and that investor confidence is still a big problem. What's more, he believes that it will take awhile for growth to comeback.

In the meantime, Kravis predicts a surge in consolidation in the financial services industry. Interestingly enough, some of the leaders in this trend could be operators like Blackstone and KKR, which don't have leveraged balance sheets.

Emphasizing this point is another private equity bigwig, the Carlyle Group's David Rubenstein. According to him, there's a huge opportunity for private equity firms to provide capital to the ailing financial services industry. In fact, the Federal government has recently relaxed some of the investment rules for such deals, which should make returns even more lucrative and give dealmakers more incentive to get transactions done.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market He is also the founder of BizEquity, a valuation website