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As 2007 began, Nochi Dankner projected that an economic crisis would unfold. In August, Dankner, the chairman of the gigantic IDB group of companies, foresaw that the subprime meltdown in America would spread and worsen. Now he says the worst still lies ahead, though come the second half of 2008, intriguing investment opportunities should arise.

IDB is the biggest holding company in the land. At the head of the pyramid is IDB Holding Corporation, under which operate other holding companies - most notably IDB Development Corporation and Discount Investment Corporation. The group owns controlling interests in some of Israel's biggest firms, including Koor Industries, Cellcom, Makhteshim Agan, Clal Insurance, Super-Sol and many more. Famously focused on the Israeli market, Dankner has been taking IDB abroad, where among other things the group is investing in a super-ambitious $8 billion property project with Yitzhak Tshuva in Las Vegas.

And what does the man who controls this empire think? That investors should show restraint and wait for the second half of 2008 before making investments, that's what, "because prices are going to drop by several more levels," he said recently. Speaking with other executives in the IDB group and with business-sector personalities, Dankner revealed his belief that the crisis will come to a head next year, and that prices of companies and assets will fall.

Dankner also said, according to one of the IDB group managers, that except for extraordinary business opportunities, IDB is not likely to pursue acquisitions until the second half of 2008. At present IDB has marked several companies as potential acquisitions and is monitoring their performance while keeping a close eye on developments in the markets, both east and west.

Dankner's policy of restraint is evident in his conduct toward the Nufarm corporation of Australia.

A few months back Makhteshim Agan, the world's biggest generic agrochemicals maker, which IDB controls through Koor, was considering buying Nufarm. The Australian company is the world's second biggest maker of generic agrochemicals. (Generics are copycat versions of brand agrochemicals made by other companies. Agrochemicals are chemicals for agriculture; for instance, pesticides and fertilizers.)

Dankner and Avraham Bigger, a legendary "corporate restructurer" who chaired and managed Makhteshim Agan at the time, badly wanted to buy Nufarm, but the high price the Australians demanded, and expectations the crisis in the markets would broaden, deterred them. They decided to wait for a better opportunity. Today the Blackstone equity group has teamed up with China National Chemical Corp (fondly known as ChemChina) to negotiate the purchase of Nufarm at a company valuation of almost A$3 billion, which is about US$2.75 billion.

Last August, the Bank of Israel and Finance Ministry predicted that the U.S. subprime crisis - caused by widespread mortgage lending to unworthy borrowers - would be over by year-end, without really affecting Israel. Dankner actually thought the opposite, that the trouble would spread to other areas and sweep along the markets in the United States, Europe and Asia.

By now, around a month short of year-end, the crisis has reached Israel. Israeli investors in both the local and international markets feel that credit - from banks and institutional investors alike - is becoming harder to come by. Once upon a time the banks were happy to finance 80 percent of a transaction for a name tycoon. Today it's hard to get more than half or 60 percent.

The trouble is also palpable in Israel's exports sector. Beyond the contraction of the U.S. dollar, which reflects the weakness in the American economy, American consumption is waning. As Americans consume less, Israeli exports - a third of which go to the U.S. - will suffer. High-tech exports are already noticeably slowing, and it isn't only because of the greenback's frailty. Consumers are growing leery.

In fact, Dankner put his "sit tight" policy into practice well before the crisis erupted. It began with 2007, when he put the brakes on acquiring new companies, saying prices had risen too high. He said he was waiting for a crisis, and indeed, during the first half of the year, IDB made not one single major investment - with one noteworthy exception.

That exception was a monster of one, the deal Dankner closed in Las Vegas, in partnership with fellow Israeli business baron Yitzhak Tshuva, owner of the Delek Group. IDB group company IDB Development and another group firm, Property & Building, are teaming up with Tshuva's privately-held Elad Properties to put up the most grandiose thing in Vegas. The Israeli groups will be investing between $6 billion to $8 billion in building a casino-hotel-residential complex-shopping center.

Dankner explained his departure from his sit-tight policy through opportunity, namely to acquire prime land, possibly the last available on the crowded Strip. The new edifice is to be built on land vacated by blowing up the Frontier hotel complex, which Dankner and Tshuva did last week. Dankner said the investment would be spread over four years, during which the subprime crisis and its corollary, the credit squeeze, should pass.

While IDB eschews making new investments, it is busily restructuring its debt and divesting assets. It has also been tapping the markets for money through long-term bonds. It managed to replace most of its short-term debt to bondholders with long-term paper.

Meanwhile, the group sold ECI Telecom, which it had owned through Koor Industries and Clal Industries, for $550 million. After having gained absolute control over the Cellcom mobile communications provider, it sold off $450 million worth of shares to a handful of top-tier investors, including Goldman Sachs. IDB also sold off $200 million worth of Super-Sol shares, though it plans to maintain its control of both Cellcom and Super-Sol. Dankner views both as core to IDB's business.

In any case, he has made the group more liquid. The company is sitting on tremendous liquid deposits, estimated at about NIS 20 billion. And it isn't about to use that money for fresh investments until Dankner feels the moment is ripe.