Before the current credit crunch hysteria, the study of economics was worthy but, frankly, all too often dull. In those heady days, anyone who warned about risks in the financial system committed the additional sin of being a kill-joy.

Even at the height of those frothy days of market mania, economist Marc Faber cared little for public opinion and wore his epithet of Dr Doom a title earned for his uncanny ability to predict market downturns, starting with the stock market crash of 1987 with pride.

In these post-credit crunch days we have revised our opinion of economists, and their perceived sexiness has risen in inverse correlation with the rapidly plunging stock markets. Those who accurately predicted the crash have become the toast of the town.

And now that we have been forced to reappraise so many of our previously held financial beliefs, it is less of a shock to discover that while Marc Faber is undoubtedly Swiss, an economist and definitely pessimistic, he is neither dull nor risk-averse.

The move to Asia

The first indication that Faber is a man who likes to take risks is his frank answer when I ask why he has lived in Asia for more than three decades: I like Asian women and thats why I stay in Asia. I think thats as legitimate a reason as any for living in Asia.

He does add that hes also attracted to the region by the excitement of the Asian economy. Nevertheless, its perhaps not the best way to build empathy with a Western female interviewer, although it definitely shows a certain chutzpah.

A shared experience helps to save Faber from falling out of my favour: we have both recently visited Victoria Falls, where the Zambezi river tumbles over a rock face more than 100 metres high.

A short distance downstream, the Victoria Falls Bridge spans the gap over the gorge, high above the churning waters of the Zambezi. The brainchild of Cecil Rhodes, the bridge was built to form the only rail link between Zambia and Zimbabwe.

The thrill-seeking economist

For adrenalin junkies, however, the bridge has an allure of a different kind. Its the site of one of the highest bungee jumps in the world. And for a thrill-seeker like Faber, the lure could not be ignored, despite being 60 years old.

Bungee jumping from there was fantastic. It was so good that I did it several times, says Faber.

But even when plunging head-first into a 108-metre gorge from the end of an elastic band, he still managed to keep his economic wits about him and the tragedy of Zimbabwe did not go unnoticed.

For Faber, Zimbabwes rampant hyperinflation should be kept in policy makers minds as they try to grapple with the fallout after the credit crisis.

The US school of economic policy says if there is a problem then the solution is to either print money or boost your fiscal deficit. But if printing money was the solution to economic problems, Zimbabwe would now be the richest country in the world, he says.

Placing blame

Faber believes that Western governments helped to create the crisis in the first place and their current policies are just as flawed. “All economies need people out there who want to set up and run businesses,” he explains. “Yet the regulatory burden on business in both the US and Europe is so immense that it hinders business growth.

“But in the world of finance, the regulatory burden was vastly reduced, principally because that industry could afford to lobby governments and ensure that their industry was left free to do exactly what it wanted.”

The result was a financial system that was allowed to pile on debt; creating a system that was addicted to leverage.

“The government created the addict. The Federal Reserve’s loose monetary policy meant it handed out the drugs free of charge and other countries followed their lead. The financial system is now like an addict that is in intensive care and going through cold turkey.

“If the patient survives then it needs to go through an extended period of convalescence before being able to return to normal life. In other words, governments must address the overleveraged global economy, not prop it up with yet more money.”

Controversial opinions

Faber thinks policy should allow for a period of slow economic growth and the weak companies should be allowed to go bust. “Why should an uneconomic company like General Motors be bailed out?” he asks.

Faber’s opinions are often radical but, over time, have been proved correct. Both business executives and politicians now take his opinions on the global economy seriously.

As an economics student in Switzerland, the outlook for the young Faber was not initially that propitious. He was a member of the Swiss B ski team and spent most of his time tearing down a mountain, rather than attending university lectures.

Despite his love of skiing, he managed to complete a PhD in economics. This was a stepping stone to a job with the now defunct brokerage firm White Weld & Company.

Making waves in the Far East

In 1973 White Weld sent him out to Hong Kong to establish an Asian office and he has remained in the region ever since. It was the perfect time for an ambitious economist such as Faber to up sticks and move to the Far East.

“I watched the economic development of Japan and I knew that both Taiwan and South Korea would embark on a similar period of expansion. When [China’s] Mao Tse-Tung died, I figured that one day his policies would be reversed and that country would have huge potential.”

After White Weld was bought by Merrill Lynch in 1978, Faber opted to set up an Asian office for Wall Street investment bankers Drexel Burnham Lambert rather than returning to Europe. “I stayed in Asia because I like the freewheeling economic freedom of the region. It is a much more exciting part of the world than Europe or the US.”

Gloom, Boom & Doom

The junk bond implosion in 1990 forced Drexel into bankruptcy, so Faber decided to set up his own small brokerage business in Hong Kong. “I did not have access to any investment research so I started my newsletter, Gloom Boom & Doom.”

I said there were cracks Faber started to get personal recognition when he predicted the Black Monday crash in October 1987. “I earned my name as ‘Dr Doom’ for predicting that stock market crash a week before it happened. It was lucky that it happened so soon after I made the prediction rather than six months later.”

He cemented his reputation further by turning bearish on the Japanese market in the late 1980s and also predicted the Asian crisis in the late 1990s. Over the course of the 1990s the subscribers to his Gloom Boom & Doom newsletter grew steadily.

Settling in Thailand

In 2000 brokerage profit margins had eroded so much that Faber decided to spend more time writing his newsletters as well as growing his advisory business. He moved back to his home in Chiang Mai, Thailand, maintaining only a small administrative office in Hong Kong.

Faber says that his conscience is clear about the current financial problems. “I was writing about excessive levels of credit well before the crisis broke. In early 2007, I said that there were irreparable cracks in the system. Later on, I said the problems with the sub-prime sector would spread throughout the whole credit system and into the wider economy.”

As would be expected from a man who went to the trouble of getting a pair of black leather trainers made in Milan with “Dr Doom” embossed in gold on the side, his outlook for the future is distinctly pessimistic.

“There’s no doubt that this will be the worst recession since the 1930s because there has been such a wholesale destruction of company balance sheets.”

Repercussions of the recession

Just how bad does Dr Doom think it’s going to get? Pretty bad is the answer.  

“The consensus is that it will not be as bad as the depression, but I think it could be worse. I think there could be social consequences,” he says. “I’m surprised that in a democracy everyone sits there and allows their governments to permit bankers to become rich on huge bonuses in the good times and then as soon as things go wrong, push the banking problems onto the tax payer. If you polarise society to that extent then you will either have a revolution or a war.”

But even Faber sees some glimmers of hope among the gloom. He’s still a fan of gold, which he thinks will continue to rise, albeit irregularly, and his tip is to invest in mining companies.

“Those companies with the cash will be able to take market share from those that go bust. And even in tough times, someone somewhere will make money.”

But there is a dichotomy to Faber’s pessimism; on a personal level he is far less despondent: “I love motorbikes and I ride them in Thailand. You have to be an optimist to do that,” he says with a big smile.

Photograph: Steve Double