A majority of Italians who went to the polls rejected the austerity program initiated by former Prime Minister Monti. This is about the only clear result from the election and will probably mean that the austerity program is dead.
This has a huge impact on the eurozone because of the move last September by the European Central Bank, who virtually guaranteed the debt of countries who followed ECB guidelines on austierty. If Italy abandons those guidelines, they would be ineligible for a bailout if their costs of borrowing began to skyrocket again.
Comic turned politician Beppe Grillo told supporters on his Facebook page that he would not participate in any government formed by mainstream parties of the right or left. As the third largest vote getter in the election, Grillo's protest voters hold the key to a stable government. He wants new elections - he probably won't get them because former prime minister Berlusconi will probably be able to cobble together a coalition himself. (Berlusconi has promised he won't stand for Prime Minister but will serve as kingmaker in the negotiations.)
Pier Luigi Bersani and his center-left allies appeared on Tuesday to have won a narrow victory in the lower house of parliament, but the Senate looks split with no party in control. Silvio Berlusconi, the former Italian premier whose center-right coalition did better than expected, is a key player since his coalition is now the second-biggest bloc in the upper chamber.
Comic-turned-political leader Beppe Grillo, whose 5 Star Movement capitalized on a wave of voter disgust with the ruling political class, had a surprisingly strong showing. His bloc of seats in Parliament could prove crucial in making any coalition government viable.
More than half the voters supported either Berlusconi's or Grillo's group -- both of which campaigned against Monti's austerity measures.
Berlusconi has already ruled out an alliance with Monti, whom he blamed for driving Italy deeper into recession.
And on Wednesday Grillo wrote on his blog that his party would not back a confidence vote on any new government formed by mainstream parties, calling instead for a new election soon.
European leaders pleaded with politicians in Italy to quickly form a government to continue to enact reforms to lower Italy's critically high debt of 127 percent of annual economic output and spare Europe another spike in its four-year financial crisis.
Though Italy's annual borrowing -- its budget deficit -- is relatively small compared with other euro countries at 3 percent of its annual gross domestic product, its overall debt stands at a colossal €2 trillion.
Some analysts believe the threat of losing the ECB life preserver might be enough to push Italian politicians into moderating some of their stances so they can form a government and reassure markets.
Holger Schmieding, chief economist at Berenberg Bank in London, said the mere prospect of facing the bond market without the ECB's implied backing could put pressure on politicians to sort out their differences, especially with a nudge from the European Union's executive commission and eurozone heavyweight Germany, the architects of austerity as a strategy for getting Europe out of its financial mess.
The pot is beginning to boil again on the EU debt crisis with the fate of the Italian economy and the EU at stake.