No, Italy will not.

Greece will though - in fact really it already has had a partial default.

They don't have to. China might be interested in buying.

this. 

While there is speculation which may make things worse, the core problem is decades of run-away deficit spending by incompetent governments ...

If there was no speculators these countries would still be on the verge of default, if there was no government mismanagement the speculators would be unable to do damage because there would be little/no reason to speculate on the country defaulting.

If the Western World defaulted on its foreign debt to China they would have reason to declare full scale war. Seriously, don't the Americans alone owe China over three trillion dollars?

Sad to see Italy in such rough shape, its one of my favourite countries. I don't get why every single country doesn't smarten up and have a balanced budget act/amendment so defaulting on debt never becomes an issue.

How else would you topple a prosperous, developed nation? Infiltrate and run it into the ground of course!

Eh, hard to say. I wouldn't bet on it NOT defaulting

However the new PM Monti has done a REALLY good job to try and avoid it.

A lot of it depends on if Italian Liberalization of it's labor markets can be accomplished without someone getting killed. Liberalization as in old school liberalization aka removing regulations and some privatization.

The rest will depend on the political will of Europe and if they can keep the other main plates upright and spinning as well.

Right now, essentially those who have run themselves to the brink of disaster are unwilling to do what it takes to fully save themselves, so are just moving towards it slower while racking up more problems...

It may depend on if Germany is willing to clean up their messes even more then originally planned.

Hello... i'm Italian..
sometimes the leaking of information about countries, can be mis-stated, because, naturally, people living in other places can't completely understand the situation..
Ok, we are living a really bad piece of time, here, in Italy and in Europe generally, but, believe me, all is far away the catastrophic scenario that media are painting.
And no. Monti is not doing a great job. Monti is not a pm. Is a puppet. Is the puppett of Rockefeller foundation and Bilderberg Group. Monti is here not for "technical leading ans support" He is here for obscure reasons.
But is better to smile and go forward. :)
Italy is not on the edge of the blade.. believe me.

How about they just commit to austerity measures to reduce their costs and have every lender freeze interest rates for current loans. This way they'd get some money back and the financial system wouldn't collapse. As long as flow of hard products like food continues, the world shouldn't slip into panic.