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Market pros are seeing more regulation ahead for financial markets.
The government and markets must have a "happy" coexistence, said Paul McCulley, Pimco managing director, on CNBC's "Squawk Box" on Thursday.
“As we get through this recession we’ll see a new union, if you will, between the invisible hand of the market and the visible fist of the government,” said McCulley.
However, profit growth will decline as the economy deleverages, or sheds debt, he said.
“As we delever and come back to a more normal leverage ratio in our economy, there is going to be a payback,” McCulley said. “Leverage is fun on the way up, but is not on the way down.”
The markets need more transparency and disclosure, Jack Bogle, Vanguard Group founder told CNBC.
Watch complete interview of all three experts at left.
“We need transparency but we’re only going to get it through regulation,” said Jack Bogle, Vanguard Group founder. “The regulatory system failed and I think the fundamental direction it ought to take is some kind of centralization so we don’t have all these different agencies with all these different rules.”
The markets are "fettered," not free, added Bogle. He blamed collision, difficulty of entry and the ease at which companies can escape oversight. The Commodities Future Trading Commission, in particular, has much to answer for in the derivative area, he said.
Healing is taking place, said Bob Doll, BlackRock vice chairman.
“When you have LIBOR improving, the TED spread improving, I believe 50 basis points this week, mortgage rates coming down some, commercial paper working again, that whole fear of the system kind of falling apart I think is moving in the right direction," he said.
McCulley, meanwhile, lauded the government's efforts to curb the financial crisis.
“Armageddon has been cut off as a fat-tail risk,” he said. “That’s not going to happen; we’re getting the right response from Washington.”
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Data is a real-time snapshot *Data is delayed at least 15 minutes