We develop a microscopic picture of shear thickening in dense suspensions which emphasizes the role of frictional forces, coupling rotational and translational degrees of freedom. Simulations with contact forces and viscous drag only, reveal pronounced shear thickening with a simultaneous increase in contact number and energy dissipation by frictional forces. At high densities, when the translational motion is severely constrained, we observe liquid-like gear-states with pronounced relative rotations of the particles coexisting with solid-like regions which rotate as a whole. The latter are stabilised by frustrated loops which become more numerous and persistent with increasing pressure, giving rise to an increasing lengthscale of this mosaique-like structure and a corresponding increase in viscosity.