Investors are wrong to ignore the Greek riots

Young Greeks took to the streets on Saturday to protest at the killing of a teenager by the police.

That may sound like a little local difficulty. But the tensions created by unemployment, marginalised youth and incompetent governments are far from exclusively Hellenic.

True, Greece has a particularly violent radical left. Students have spearheaded anti-globalisation and anti-establishment movements since the 1970s. The university quarter of Athens is often under a police lock-down. Also, the scandal-riddled conservative Greek government has alienated much of population, not only extremists.

But this uproar is unprecedented – even for Greece. It spread rapidly around the country. Rioters have targeted banks, looted stores and burnt cars. The police were caught off guard and have responded with enough violence to fan the flames of discontent. The protest is no longer limited to an anarchist fringe. There is widespread anger at the government.

Similar outbreaks are possible in other countries. Recessions are always tough on the young. And while the Greek rioter’s slogan – “bullets for your youth, money for your banks” – may not qualify as sound socioeconomic analysis, it has a catchy ring.

Social protests have sometimes changed the world. Think of the French and Russian revolutions. But even lesser shifts can cause trouble for investors. The Greek government, which has only a two-seat majority, may very well fall in response to the riots. Pacifying measures from a Socialist replacement could further damage the country’s already weak finances.

So far investors hardly seem to care, even in Greece. The Athens General Index was up 4pc on Monday morning, following the general European pattern.

But that calm looks unjustified. Events in Pakistan and India have brought geopolitical risk back onto investor’s radar screens. They should now also be thinking about social risk.

For more agenda-setting financial insight, visit www.breakingviews.com

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