Prediction: markets begin to "clear" after election

Over at MarginalRevolution, Tyler Cowen bemoans the lack of trading in many types of securities (many of them linked to real estate). No trading means no prices which robs capitalism of one of its advantages over planned (or regulated) economies:

Market prices have been drained of their informational value and thus don’t much reflect the “wisdom of crowds,” as they would under normal circumstances. Investors are instead flocking to the safest of assets, like Treasury bills.

The absence of trading is a big problem. Financial institutions have been stuck holding illiquid assets, whose value cannot be easily determined. Who wants to lend to the institutions holding them? No wonder there is a credit crisis and a general attitude of wait and see.

These assets are derivatives, based on the underlying housing market, which has not cleared (Let house prices fall). And we know from past posts that housing prices are notoriously sticky, as investors hang on to houses even when it is more profitable to sell at a lower price (Sunk cost fallacy in real estate). So the derivative securities cannot be accurately valued until we have prices on the underlying asset. This leads to my prediction:

Trading will resume after the election.

If homeowners see their house prices fall by the amount (10, 20, or 30%, depending on location) that it will take to clear the real estate markets, they will put enormous pressure on politicians who are running for office. The Fed recognizes this pressure, and is aggressively intervening in the markets to keep politicians from doing something really dumb. But as long as home owners see the Fed aggressively intervening in the credit markets, they will be unwilling to sell at a loss. After the election, this should change.