It was overextended, because it stopped growing.
As long as it was actively subjegating other kingdoms and cities, there was a regular influx of loot and slaves. That stopped once they abandoned their efforts to conquer Germania (wich wouldn't have been a cash cow, anyway)
Plus with the east-west divide, the majority of truly "rich" regions became Constantinople's realm.

Plus, the rapid growth of the Germanian populations wich caused their migrations.

Quote Originally Posted by Louis
In the west, the idea of a universal Empire lived on until Napoleon disbanded the Holy Roman Empire in 1806.
Technically, Franz Joseph disbanded it himself. Napoleon did push him to do it, most probably because he wanted to be Europe's "new" emperor and thus needed to get rid of that old relic.

As for universality, it was called the Holy Roman Empire of the German Nation. As an institution it was even less relevant than the western Roman empire in 475.