Italian voters were supposed to nudge their nation along the path to reform this week. Instead, in a fit of throw-the-bums-out pique, they gave the leading center-left Democratic Party the thinnest of victories, raising fears that the new government will be unable to lead effectively. That signals trouble for the cost-cutting European leaders eager to get debt-plagued Italy onto more solid financial footing, and European markets plunged on fears that Italy just single-handedly reignited Europe's debt crisis. Could it really be that bad?

In a word, yes, suggests Hugo Dixon at Reuters. More than half of those who cast ballots backed either Silvio Berlusconi, who "drove Italy to the edge of the abyss when he was last prime minister in 2011," or Beppe Grillo, "who really is a stand-up comic." By giving these clowns influence they don't deserve, Italians have ensured that a weak, center-left ruling coalition won't be able to do much of anything. The "disastrous election result" drove up bond yields Tuesday in Italy, Spain, Portugal, and Greece — a sign that investors are worried that these governments won't do what is necessary to repay their debts.

This comedy could easily end in tragedy. The inconclusive result has echoes of last year's first Greek election — except that Italy is bigger and more strategic. The country faces political paralysis, while its economy is shrinking and its debt is rising. The European Commission forecast last week that GDP would fall a further 1 percent this year after last's year 2.2 percent drop. Debt, meanwhile, would reach 128 percent of GDP by the end of this year.

The euro crisis went into remission after the European Central Bank's president Mario Draghi promised last summer to do "whatever it takes" to preserve the single currency. But, if Italy proves ungovernable during this critical time, even the ECB's safety net may not work. [Reuters]

Few observers deny this is a significant setback, since resolving the crisis hinges on calming fears and projecting an image of stability. "Europe appeared to have the worst of the financial crisis behind it," says Brian Milner at the Toronto Globe & Mail, "because of the European Central Bank's vow last summer to do whatever was necessary to safeguard the euro," including buying up unlimited quantities of sovereign bonds. And now this.

Any flareup is ill-timed and threatens to undo the efforts to restore economic and financial stability and placate bond investors, who have the capacity to make life unbearable for governments that fail to rein in their deficits. The future of the euro zone depends on keeping Italy, the euro zone's third-largest economy, and No. 4 Spain on the path toward responsible fiscal management — a task that has just become substantially more difficult. [Globe & Mail]

Actually, this isn't going to restart the debt crisis, says Michael Schuman at TIME, because it never really ended in the first place. For a while there, the waters appeared to be calming and it looked "like gloating time for the optimists" who insisted that the fears of the break-up of the European common currency were overblown. But then "Mario Monti, the outgoing prime minister, and his allies got trounced" — polling a dismal fourth — due to anger over the "painful budget cutting and deregulation" he imposed to avert a meltdown."

His defeat sends a resounding message from Italian voters that they don't much care for Monti's euro-saving reforms, which helped topple Italy into a recession. Monti becomes the latest political casualty of the euro crisis. Meanwhile, that same disenchantment with reform is also building support for once-fringe parties. The new Five-Star Movement, which campaigned on an anti-austerity platform, was running a close third in the election results. What all this tells us is that the steps needed to put the euro on firmer ground are too politically unpopular to implement in today's European democratic politics — a reality usually ignored by Europe's leaders...

The reasons Europe is in this mess are the same ones the gloom-and-doom types have been pointing out all along. Europe has no region-wide strategy to spur growth; the banks haven't been fixed; progress towards integration remains mired in mud; the austerity-obsessed approach to reform is counterproductive. And so on. The political uncertainty in Italy is just the latest manifestation of these problems, and the latest signal of how unresolved the problems are. It won't be the last. [TIME]