Here in the financial district, they all refer to him as "Henry." Everybody knows it's not Kissinger, but the 54-year-old Salomon Bros. partner, Henry Kaufman, Wall Street's most famous guru, whose economic predictions give the markets cardiac arrest if they're bad, or a shot of adrenalin if they're good for stock prices.

Kaufman is a very serious, low-key economist who has made a habit of being more right than wrong on interest-rate projections. For the past several years, he has been gloomy about the economic outlook -- and it should be remembered that his forecast of lower interest rates last week, which skyrocketed the Dow Jones index by a record 38 points on a single day, was based on a very pessimistic assessment.

In an interview two days before his dramatic announcement, Kaufman said that "if we can't get a good economic revival in the next 18 months, the quality of credit will deteriorate further in the private sector." He is dubious about such a revival: "I think we are in a situation that will lead to some crunching, it will lead to economic stalling or paralysis. It could also lead to more business failures."

At this point, he says, corporate leaders seem willing to settle for mere survival. Economic recovery, as such, seems an elusive goal.

In essence, Kaufman believes that long-term interest rates will go down from the present 12 1/4 percent to 9 1/2 percent within a year because the private economy is proving to be weaker than anyone suspected. Thus, business people have little incentive to borrow money, and the government should be able to finance huge deficits without "crowding out" private borrowers.

Unassuming, with little personal flair -- he seems genuinely surprised when one of the Sunday panel shows invites him to be a guest -- Kaufman insists that he is no oracle, that neither he nor any other forecaster determines "the fundamental direction of events." He's doubtless right about that, too, but he seems to have an uncanny sense of timing, an ability to pick turning points in the economy.

Kaufman's forecasts often are taken as the validation of what the markets already know. When Kaufman's ideological twin, Albert Wojnilower, an economist at the First Boston Corp., delivered essentially the same forecast the day before Kaufman did last week, the market went up a mere 4 points. It wanted to hear the same thing from Henry.

Kaufman outlined his current thinking during a long, relaxed lunch in a private dining room at Salomon Bros.' elegant 44th floor headquarters, which has a commanding view of New York harbor, at the extreme southerly tip of Manhattan Island.

As he had warned publicly before the Carter-Reagan election, whoever won would face a "domestic financial fuse" in the form of the enormous debt piled up by business people, consumers and government during the inflation of the preceding years.

But Kaufman now fears that the overhanging debt has become an even greater problem because of financial deregulation, which encourages banks and other institutions to take undue risks, and by Reaganomics, which has boosted the deficit and lowered the quality of credit.

"You have to step back a little bit, and ask, 'what is it all about, how did we get to this point, and maybe, where do we go from here?' " Kaufman said.

"I happen to strongly believe that what is happening in financial institutions in general is reflective of a build-up of a massive debt structure, both in the United States and internationally.

"That debt structure . . . has grown from a total for everything -- households, business and government -- from $700 billion in 1960 to $1.5 trillion in 1970, and to $4.5 trillion last year. So in a 10-year period, it's increased threefold."

Worse, Kaufman points out, is that more of the money that people owe has been borrowed on a short-term basis--and has deteriorated in quality:

"This debt is now more vulnerable because of Reaganomics. The combination of fiscal expansion and monetary restraint has poured out a continuing volume of triple-A rated Treasury issues, as they borrow to finance the debt -- while restraint from the Fed's policy adds to volatility and high real rates of return.

"Let me take it one step further: there is another dimension to monetarism, and that is its emphasis on deregulation of financial markets. What that does is to instill an enormous entrepreneurial drive into financial institutions."

Kaufman believes, in essence, that the financial institutions have been encouraged, in a "go-go" atmosphere, to put more emphasis on the entrepreneurial side -- "the desire to make money" -- than on their sense of "fiduciary" or safe-keeping responsibility to the people whose money they manage or hold.

"The ultimate discipline of monetarism," he added "is a willingness to accept business failures and bankruptcies. They government officials are saying, 'if you fellas don't recognize the rules of this competitive approach -- it's failure you face .' I don't think that's the way to run a financial system."

If, as he fears, there may be no significant economic improvement in the next 18 months, leading to a "crunch" with more business and financial failures, "the credit structure will become more exposed, because it will be perceived by lenders and investors that the earning power of their investment, be it bonds or equities, has deteriorated even further.

"In other words, lenders of all sorts are hoping for a big recovery in corporate profits, which would improve cash flow. And if it improves cash flow, then it improves the ability of these corporations to pay off some of their heavy indebtedness. That's what it's all about . . .

"If by some chance there's a disappointment in that sector, then that will decrease the willingness of the lender to lend . . .

"And I must say there already is much evidence that business corporations are shifting their priorities toward financial survival rather than maintaining their focus on operating decisions.

"The reason for that is that profits are falling sharply, there's a very heavy debt structure, the interest payments are an extraordinary burden, capacity utilization is way down, and some corporations are in the process of cutting back their capital outlays. And there's no way at this point that we can prevent that from happening: if anything, next year is going to be a dismal year for capital outlays . . . "

Kaufman has one more explanation for the disarray he sees in financial markets: with the Reagan administration's philosophic commitment to deregulation, the most capable young people are moving away from the regulatory agencies either to other sectors of government, or into the better-paid private sector.

"From a regulatory or surveillance viewpoint," Kaufman says in a characteristic understatement, "the supervision of financial institutions has not been conducted with the highest level of sophistication."