The incredible political resurrection of Silvio Berlusconi, who at the last count has virtually secured the upper house of the Italian parliament, coupled with the rise of former stand-up comedian Beppe Grillo, shattered the calm that had settled over Europe as yields on Italian shot-term bonds climbed to their highest level in more than four months. The fear that stalks the markets is whether Italy's €2 trillion (£1.73 trillion) debt pile now poses a re-emerging existential threat to the eurozone.
It looks increasingly likely that another round of elections in a few months will be needed to resolve the political deadlock, with stand-up comedian turned anti-establishment figurehead Beppe Grillo vying with Mr Berlusconi and left of centre coalition leader Pierluigi Bersani to form some sort of coalition government.
But that question may be a side-issue, compared with solving the dominance of the european North's (read Germany's) export-orientated industries. How you interpret the election depends entirely on your own political point of view, with many on the left seizing on a supposed "rejection" of austerity measures pioneered by Mario Monti's technocratic government. But it is worth noting that a quarter of Italy's electorate simply didn't turn up to the polls - the highest abstention rate since the Second World War - so drawing too many conclusions about the settled will of the Italian electorate is unproductive. Having no government is not really a problem for Italy in the short term, the civil service is designed to more or less run itself, and the European Central Bank's ability to buy the country's bonds should keep a lid on short-term yields.
And Italy's problems should be kept in context. According to Unicredit analysts, investors don't want another tough round of reforms: "There is still measurable positive growth effects in the pipeline from this past year's reforms. In other words, Italy does not need new draconian measures in the short term, but just an avoidance of any back-pedalling on the policy front," the bank said in a note. So, as long as the country retains its basic structural reforms, then the market is likely to back away from a bond strike, which gives everyone room for manoeuvre.
The real question is what happens to a European Union that seems to be stuck in two gears. The contrast between the fate of Italy's economy contrasts greatly with its powerful neighbour to the north. Germany's economy may have contracted by more than expected in the last quarter of 2012, but business confidence is on the rise, especially among its export-orientated companies. That is helped by further falls in the euro's value as it makes the country's high-tech goods more appealing to consumers in emerging economies. It seems that solving this paradox at the heart of Europe, whether through exchange controls, or the further integration of key institutions, will have a greater effect on the eurozone's long-term viability than Italy's squabbling politicians.
