A way to think about the idea is the financial crash. “Sub prime mortgages” means “fraudulent loans to people who didn’t exist” (money creation). The money created by those loans was spent a thousand times over, all due back to bigger banks who leant them money, with new loans and made with them as collateral and all packed into toxic financial instruments. When it was found out that those people didn’t exist, the money literally disappeared. Thats how “companies balance sheets just vanished.”

Uhhh that’s not what the sub-prime mortgage crisis was. What you’re describing was extremely risky mortgages being rubber-stamped to borrowers who shouldn’t have received them, then bundled into Mortgage Backed Securities (basically a type of bond backed by, say, 500 mortgages containing a variety of risk profiles designed to balance out into a low risk but decent yield investment) and the fraud was that too many of these high risk mortgages were bundled into these securities and the risk level was misrepresented to investors, so when people defaulted on their mortgages in large numbers this caused the MBSes to rapidly devalue (which given they were treated as a way to protect capital against instability this greatly damaged many funds such as retirements and bank investments, 2 things that are heavily regulated to make safe investments because the risk is too high should they fail)

Or just go read the Wikipedia page for far more detail: https://en.wikipedia.org/wiki/Subprime_mortgage_crisis