Greece’s unemployment rate is painfully high at 25.8%.
When this many people are jobless, the economic story quickly becomes a sociology story. People with no jobs have lots of time and little to lose.
High unemployment means an escalation in civil unrest.
Back in 2011, then Societe Generale strategist Dylan Grice circulated a controversial chart linking Weimar-era unemployment in Germany to the rise of the Nazi party. From Grice:
“The depression broke something in the German people. Even after the horrors of hyperinflation, which peaked in 1923, and the subsequent currency stabilisation of 1924, which caused a deep depression in 1925, the Nazis were barely on the electoral radar. But, by the time Germany’s late 1920s depression was in full swing, the situation had changed. (As the chart shows, the depression began sooner in Germany than in America. This was because the US, as Germany’s main creditor and most important financier of its reconstruction, began to repatriate funds back to the US in the late 1920s, first to earn better returns in the then booming US economy, then to cover the losses caused when the boom turned to bust).
Economic depression and crushing debt characterises Greece today.
And just a month ago, Greece’s Neo-Nazi Golden Dawn party took third place during the election.
“When I go home today, I will go home to a country where the third-biggest party is not a neo-Nazi but a Nazi party,” Greek finance minister Yanis Varoufakis said during a press conference with German finance minster Wolfgang Schauble. “Germany can be proud of our fight against Nazis. We now need the German help.”
It sounds a bit extreme. But Varoufakis isn’t kidding.