Here's the Register's analysis of the election in Israel. As so often happens in a parliamentary system with multiple parties, no party has enough votes to form a government on its own, so they have to put together coalitions that usually carry the seeds of their own eventual instability within them. This time, with the war in Gaza and rockets still occasionally finding their way into Israel proper, it's not surprising that the electorate took a rightward turn. Despite twists and turns, I still suspect that Bibi Netanyahu will eventually form the government and be prime minister, but the process could take a while -- though not so long as the interminable U.S. transition period.
The most important thing to understand, I think, is that whatever chances existed for a "peace process" might have existed a couple of years ago, there's no chance now. Yet our diplomats keep talking about resurrecting the two-state solution and Obama has appointed poor old George Mitchell as special envoy. Although being a special envoy isn't such a bad gig. Of course appointing a special envoy is what presidents do when they suspect a situation is hopeless and don't plan to devote any of their own time or personal political capital to a situation.