If the potential consequences of the Italian national election were not so severe, the outcome would be the stuff of great comedy. After all, one quarter of the votes were taken by a party formed by a standup comedian, while former Prime Minister Silvio Berlusconi has again climbed to center stage and looks poised for yet another comeback.

But while Italian politics is a great spectator sport for outside observers, the real world implications of the vote are anything but amusing. The vote has shattered investor confidence, and has already sparked a run on Italian bonds and interest rates. There are fears of contagion and even the prospect of a rupture within Europe and the collapse of the eurozone.

There was no mistaking the growing unease among Italian voters over the austerity policies adopted by technocratic caretaker Prime Minister Mario Monti. After Mr. Berlusconi had antagonized markets and EU mandarins alike with his posturing and empty and broken promises, Mr. Monti was recalled to government and made prime minister with a mandate to cool the anxiety that had pushed Italian bond yields to new heights, threatening Europe’s third largest economy with a default.

A mix of spending cuts and tax increases did the trick, eventually cutting Italian bond yields to near German levels.

But public disaffection grew. Manufacturing has fallen for 19 consecutive months. More alarming was the fact that unemployment has reached 11.7 percent, with youth unemployment hitting record highs, with 38.7 percent of young people out of work. The austerity policies were one factor, but there was also anger at European politicians who seemed to be ruling Italy by proxy, to be protecting their own banks’ investments and to be indifferent to the human cost of those policies. (In fact, the real “villain” was the market and European policymakers were trying to stave off the worst consequences of its judgments, but Italian voters preferred to see Europe as the bad guy.)

This environment was ripe for Mr. Berlusconi’s populist rhetoric. Even though he presided over a decade of economic stagnation and brought his country to the brink of catastrophe, the former prime minister has an unerring nose for opportunity. In an unabashed play for popular support, he promised during the campaign to refund the proceeds of a new tax on first homes.

The result was the political resurrection of a man many thought had seen his last campaign. (But the prosecution has started investigation into Mr. Berlusconi’s possible violation of the election law, because he mailed letters to voters stating that they would get the tax refund at post offices.)

A month ago, the headlines focused on his trial on charges of having sex with a minor and lying about it. Now Mr. Berlusconi has regained control of his People of Freedom movement and drove it to a stunning performance, coming within a fraction of a percent of the center-left in the Chamber of Deputies.

Final results showed the center-left coalition, led by Mr. Pier Luigi Bersani, won 29.54 percent of the vote while Mr. Berlusconi’s center-right coalition, trailing by the slimmest of margins, with 29.18 percent. (This creates a much larger margin of victory since Italy’s electoral law gives the winner of the most votes 340 of the 630 seats in the lower house, while losers split the rest proportionally.)

A still bigger surprise was the performance of the Five Star Movement (5SM), a party headed by comedian Mr. Beppo Grillo. Formed just three years ago as a protest movement, 5SM has had an extraordinary rise, going from 1.8 percent of the vote in a local election in 2010 to 25 percent of the national tally last month.

While its performance would seem to give it great leverage in the bargaining to form a new government, the party considers all the established parties ineffectual and corrupt and has pledged to only vote for particular pieces of legislation with which it agrees and will not join a coalition.

In theory, then, Mr. Bersani could turn to Mr. Berlusconi to form a grand coalition but a junior member of the center-left group has said that that is unacceptable. The result is paralysis with the only real majority representing a repudiation of the austerity program.

Mr. Monti’s party received just 10 percent of the vote. To add to the confusion, the term of Italy’s president, Mr. Giorgio Napolitano, expires in May. As the president picks the man to form a Cabinet, and Mr. Napolitano is widely considered to be the person who engineered Mr. Monti’s replacement of Mr. Berlusconi in November 2011, the timing could not be worse.

The reaction to the election was dismay throughout Europe. Bond yields increased, the value of the euro dropped, as did stock markets throughout Europe. The vote against austerity is seen as a vote against Europe. And indeed, the austerity package was a condition of European aid to Italy.

Without the package, the European Central Bank (ECB) cannot buy up Italian debt. And if the ECB won’t buy it, not many others will either. If that happens, then Italy’s continued participation in the euro is at risk, a step that could threaten the viability of the entire euro project.

It is unlikely that Italian voters seek to torpedo the grand design of Europe, a project that has benefited them greatly. But they are angry and feel as though they were being made to suffer for the sins of others. It is not yet clear if this election is comedy or tragedy, but time will surely tell.