European sovereigns don't have to default; they all have government-owned assets that could be sold off, whether it's government monopolies or other holdings. There's a long history of this, just cf the mines of Almaden in Spain ( who is not a n00b when it comes to difficulties with debt ).

European politicians have to choose between selling similar holdings off, or watching their banks implode. While the latter may seem initially preferable, the loss of those hubs of financial activity will destroy their economies. We then end up with this long slow painful dance until it becomes clear that politicians have no other choice other than to sell the family jewels (or mercury as the case may be).