This is a really trivial statement.  It’s not yet 10am and I can think of a bunch of items I’ve used today that "most" people (myself included) wouldn’t understand with any depth(microwave, internal combustion engine, satellite radio, etc).  

With any asset backed by mortgages (regardless of the structure) the risk is always that the mortgages won’t pay.   Mortgages don’t pay, investment doesn’t pay.  I don’t think it is that complicated to understand.  Clearly the risk was underestimated, but I don’t know that it was misunderstood.  
 
So much investment capital flowed into these risky mortgage back securities because people were desperately looking for investments with a good return. There was just too much investment capital and not enough good things to invest it in.

Again, this makes little sense to me, at least on the surface.  I’m just trying to imagine the scenario where someone had so much money, but stock market returns weren’t good enough, so they went out and bought a bunch of CMOs?  And this was so widespread that it became a "big" contributing factor? 

Regardless of the cause of the bubble, it’s clear there’s a shortage of investment capital right now. You said yourself, "You don’t want to be a business that needs to borrow money at the moment."

Yes, but the real estate bubble was funded by mortgages given to people on terms they could never be expected to repay (subprime loans). That was made possible by creating a whole new funding mechanism for home mortgages by issuing bonds and other financial instruments that were so complicated most people could not understand the risk. So much investment capital flowed into these risky mortgage back securities because people were desperately looking for investments with a good return. There was just too much investment capital and not enough good things to invest it in.

It’s important to note that investment is a form of consumption. Acme, Inc issues a share of stock and sells it to me for $20. Acme then spends that $20 on salaries, equipment, materials, buildings, etc. That investment stimulates demand just as much as if I bought $20 worth of government bonds and the government spent that money building bridges. The only difference is that Acme expects to turn a profit.

Mikeca,

Second, there is a reasonable argument that one of the big contributing factors to the current crises is there was too much investment capital chasing too few investment opportunities. This caused the capital to slowly flow into more and more speculative investments.

That’s interesting, but I have my doubts, at least as a "big" contributing factor that is unique to today’s troubles.  Can you point me to a link, article, economist, whoever that makes this argument, I would like to read more.

Ideas such as temporarily waiving the payroll tax for employers do not look viable to me. This may cause some employers to lay off fewer people, but it doesn’t seem to me that it will do much to bost consumption. There are companies that are not in any real trouble right now. (Praise the lord that I appear to be working for one of those). Those companies are unlikely to pass those benefits on to employees. In the short term they would just horde the cash, because cash is king right now. You don’t want to be a business that needs to borrow money at the moment.

When people who would normally be calling for a tax cut start arguing in favor of a big public works program, I’ll view it differently.