Reply #1: Imagine you were lower middle class, making, say, $35,000 a year

[alcibiades_mystery]

in a small town with two banks. Imagine each of those banks lent you unspeakable amounts of money, say $10 billion, with ever increasing interest rates on new loans allowing you to pay back the old ones. Then the jig is up, and nobody else will loan you money to pay back the existing loans. Those two banks are still going to be out $10 billion, and may fail, or be unable to loan $1 million to a solvent person who wants to build a little restaurant.

It's not contagious because of the size of the greek economy, which is neither here nor there. It's contagious because of the size of the loans (bonds) made to the Greek government, and the effect that would have on credit more generally.