The first domino is Greece. It owes nearly $10 billion to Portuguese banks, and with Portugal already falling two notches in S. & P.'s ratings and facing higher borrowing costs, a default by Greece would be a staggering blow. Portugal, in turn, owes $86 billion to banks in Spain; Spain's debt was downgraded one notch last week.

The numbers quickly mount. Ireland is heavily indebted to Germany and Britain. The exposure of German banks to Spanish debt totals $238 billion, according to the Bank for International Settlements, while French banks hold another $220 billion. And Italy, whose finances are perennially shaky, is owed $31 billion by Spain and owes France $511 billion, or nearly 20 percent of the French gross domestic product.

While an interesting use of data visualization, the problem with the graph is that it uses the wrong figures! It looks at all debt, no matter who took the debt out. (And even then, some of the figures aren't that impressive: total lending by Greece to other PIIGS countries? $2bn.) For example, Nelson and Bill should have been concerned that their graphic showed Irish debt at almost the same level as Spain, a country ten times its size. If they'd divided the debt by population, they might have been a little suspicious to read that Ireland's citizens apparently owe an average of over $500,000 each! Trust me, if the Irish government had debts of the guts of a trillion dollars, I'd be the first to be proclaiming the end times.

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That is why the markets are worried not about all debt. They are worried particularly about government debt, because typically there is no corresponding asset. And it turns out that there is a difference in scale between all debt and government debt - a huge difference in some cases. It turns out that, in the case of Greece and Italy, only about half of all debt is government debt. For Portugal and Spain, it's only one fifth of all debt. In the case of Ireland, just five percent of all its debt is general government debt.

The reason is hardly a secret: Ireland is a major international financial services centre. The international financial services sector plays such a large role in the Irish economy that it even gets its own set of statistics from the Central Statistics Office. At the end of 2008, the sector had debts of almost €1,650bn. Don't worry though - it also had assets worth about €1,660bn.