PC psu 12v and 5v connection in parallel
Current will flow from the 12v to the 5v volt rail, causing a short and the PSU to shut down.

You know that if you short out i.e. 5v and ground then high current will flow and the power supply turns off to a) don't overheat and b) don't burn you wires (or something along those lines). Voltage is relative, so 5v - 0v = 5v difference; 12v - 5v = 7v, that's the same as shorting 7v and ground.