If you die, the proximate cause of death is always the fact that blood has stopped flowing to the brain. Similarly, if you’re in a crisis, the proximate cause of the crisis is liquidity, or rather the lack of it. You can be insolvent for as long as you like, so long as the money keeps flowing; it’s only when the money stops that things come to a head.
And we’ve reached the point, in Europe, at which the money has stopped flowing.
When your ability to “extend and pretend” goes away, it’s lights-out. Imagine how fantastically the housing market would collapse if mortgage rates suddenly doubled.