Israel's vote is too close to give any party a clear advantage.
Even Israel's 'right' is comfortable with a pretty high level of socialism. There's the oft repeated issue of how the parliamentary system causes flawed government, but the real disaster there is the same as here- elections have become a popularity contest. Netanyahu's early lead reflected Israel's discontent at continually having bombs dropped on it, but the previous government, of which Livni was part, began the war on Gaza before the elections, which was enough to keep her in contention.
Now the Gaza war is basically unfinished, because they do not seem to be willing to address the need to control the area rather than indulge in the two-state fiction. But as part of the election campaign, Livni fared rather well for the war but also could provide some of that 'good-looking blank slate' that Obama managed here.
This is where having to form a coalition will actually help Israel; if Livni is as incompetent as Obama, she will bungle it and Netanyahu will head up the new government with the help of other parties. I wonder if they would actually entertain the possibility of forming a government together; it's not necessarily good for the country, but they could choke the smaller parties out and make Israel suffer a version of the Democrat/Republican inanity.
Anyway, in my opinion, this is another loss for those who sacralize the vote. Israel was quite dissatified with it's previous administration, and yet they vote for themselves- well they voted blah, and all the usual suspects get to play their power games. Clearly the implication that we can improve the situation through the vote isn't quite accurate, especially given who is in charge of controlling the elections.