Too Much Money

In digesting all these recent banking crises, it seems that there is simply too much money in the system. Japanese banks, for example, have billions in exposure to Lehman and other formerly-worthy institutions. Assuming that their investment teams are rational and intelligent, and if you believe the news, then their exposure to our failing institutions was not a significant part of the portfolio.

There's just a huge amount of money that has to get invested somewhere, somehow, each and every day (example: CalPERS). How do we ever expect to avoid such meltdowns when all "banks" are essentially forced to find somewhere to put their money? They don't have a choice, they have to loan it out, find a willing borrower. Which would imply these problems are inevitable and continual, impossible to avoid. The money needs a home. Water flows downhill. Fills the lake, lifts all ships, and then eventually overflows the dam.