Got to think positively: we avoided the main threat of a Tory outright victory. A Lib-Lab pact would still be a minority, so that is looking unlikely at the minute, although not impossible.
Nick Clegg is in a good position in that he can SAY that it's up to the Tories to propose the first deal with them, but he can just reject it as insufficient. This would force the Tories to rule as a minority, which has the dual effect of disabling the Tories from implementing their more right-wing ideas, and of ensuring that all the unpopular measures to 'save the country/economy' fall squarely on the reputation of the Tories. So, when the next election rolls round, the Tories should lose seats.
Still, Clegg wants proportional representation however much he talked it down during the campaign, and he can afford to be that 'radical' now since it's up to him to reject or accept proposals. Proportional representation would seriously increase the number of seats that the Lib Dems get in the future, and would marginalise their main foes, the Tories. So this or something similar would be the basis of a Lib-Lab pact, as shown by Mandelson last night supporting electoral reform.
Fascinating stuff.