Marc Faber came to fame by predicting disaster, and he’s still at it a quarter of a century later. The author of the appropriately titled Gloom, Boom and Doom Report correctly predicted the stock market crash of 1987, which had its 25th anniversary last week, and it’s been angst and worry ever since.
For the benefit of those just out of business school, Monday, Oct. 19, 1987, saw a 508-point drop in the Dow, to a (now seemingly quaint) 1,738.74, which accounted for 22.61% of the index. Causes of the crash range from computerized trading that got ahead of itself to high-flying, 1980s’-style overvaluations to, of course, investor behavior.
Eventually markets calmed; Faber, however, has not.
In what could be considered his commemorative anniversary edition, Faber told CNBC on Monday that the debt burden in the United States and other Western countries will continue to grow, leading to a "colossal mess" within the next five to 10 years.
"I think the regimes will try to keep the system alive as it is for as long as possible, which means there's no fiscal cliff, there's a fiscal grand canyon," Faber told the network.
Faber argued that the political systems in place in the West would allow the debt burden to continue to go up. Under such a scenario of neverending deficits, the Western world would rack up huge deficits. One day, the system would break, he said, according to CNBC.
"Eventually you have either huge changes occurring in a peaceful fashion through reforms, or usually through revolutions," he said. The U.S. was getting closer to such a revolution, he said, as was Europe.
"I think the timeframe would be within five to 10 years you have a colossal mess... everywhere in the Western world," Faber said.
"I think the deficit here (in the United States)—irrespective of who is in the White House—will stay above a trillion dollars per annum for at least as far as the eye can see," Faber said.
Bureaucracies in the U.S. as well as Europe were far too big, he said, and were a burden on the economy.
"My medicine for the U.S. is: reduce government by minimum 50%," he said. "The impact would be immediately an improvement in the economy."