"After the immigrants, you're next." That's what was written on flyers that appeared this week in the gay clubbing district of Athens. As violence against immigrants and ethnic minorities escalates across Greece, supporters of the ultra-right Golden Dawn party have also begun to promote hate attacks on homosexuals and people with disabilities. These fascists march with black shirts and flares through Athens, terrorising ethnic and sexual minorities, waving an insignia which looks like nothing but an unravelled swastika, and declaring disdain for the political process. And yet, across Europe, they continue to be treated as a mere symptom of Greece's economic crisis.

Once, right-wing thugs only came out to attack immigrants at night. Now they do so in daylight, unafraid of the consequences because there rarely are any. In recent weeks, the number and severity of the attacks have increased – on 12 August, a 19-year-old Iraqi asylum seeker was fatally stabbed by a gang on motorcycles just streets away from the Greek parliament – and if migrants report attacks to police, they risk being arrested.

Not only are crimes against immigrants in Greece considered low priority, much of Golden Dawn's support base comes from police ranks. Exit polls in the May 2012 elections suggested that in some urban districts up to 50 per cent of Greek police voted for the racist group, which now holds 7 per cent of the seats in parliament.

The stabbings, beatings and motorbike attacks have become so routine that in many parts of the capital, immigrants are afraid to go out alone. While Greece has long had a large migrant population – 80 per cent of refugees to the European Union arrive in Greek ports – families who came to the country seeking safety are now afraid for their children. A recent Human Rights Watch report, Hate on the Streets, found that "national authorities – as well as the EU and the international community at large – have largely turned a blind eye" to xenophobic violence in Greece.

Turning a blind eye would be bad enough. But now the Minister for Public Order, Nikos Dendias, has pledged to crack down on immigration, which he described as an "invasion" and "a bomb at the foundations of society". Tellingly, Dendias also described the presence of foreigners in Greece as a more significant threat than the economic crisis – a message he would no doubt plaster across the walls of Athens if he could.

Whipping up racism has become a strategy for diverting an embittered nation's attention away from the government and public spending crisis. Like many flagging centre-right administrations, the New Democracy coalition is mimicking the language of far-right extremists, pandering to rather than pacifying public xenophobia. With Dendias's support, the police are rounding up immigrants, arresting and deporting thousands in raids across Athens and nearby cities – a programme named, with no apparent irony, after Zeus Xenios, the Greek God of hospitality.

Golden Dawn's surge in popularity and confidence did not come from nowhere. The party has been active for decades, but four years ago, before the first wave of austerity cuts in Greece, it was regarded as something of a joke. This summer, with its party at the table in parliament, members of Golden Dawn are setting up "Greeks only" supermarkets and distributing food parcels to the unemployed in Syntagma Square – but only for "real Greeks".

The left does not need to point to the historic correlation between imposed economic austerity and the rise of fascism: Golden Dawn is making that link explicit, celebrating it. But simple willingness to capitalise on public anger will never, in any nation, make racist thugs the voice of the people.

As with many fascist groups, Golden Dawn claims to represent the marginalised working class. Like far-right groups across Europe – including the English Defence League and the new British Freedom Party – Golden Dawn declares itself the enemy of a bankrupt democratic system, exploiting for its own ends popular anger against neoliberal economic mismanagement. However, although it professes to stand against austerity, it has no economic project: its tactics are simply violent, divisive and nauseatingly racist. And the governments of Greece and Europe seem willing to tolerate this as the social cost of an ongoing austerity consensus.

The European Union was established after the Second World War to ensure socio-economic unity on a continent ripped apart by fascism. In the Greece of today, Golden Dawn is being treated as a serious political party, despite its members' eschewal of democratic process and tendency to assault rival politicians on television.

Long after the Nazi party took power in Germany in 1933, after the Reichstag had been burned and anti-semitic violence became official state policy, European governments remained more worried about the possibility of a socialist Germany than a fascist one. Almost until the Second World War, it remained more important to many world leaders that Germany pay down its debts. Drawing historical parallels with Nazism is a weary rhetorical technique that commentators on left and right have cheapened by tossing the simile into discussions of food labelling and over-enthusiastic traffic control. In this case, however, it's not rhetoric.

Actual fascists in actual black shirts are actually marching around Athens waving swastikas and burning torches, and maiming and murdering ethnic minorities, and world governments appear frighteningly relaxed about it as long as the Greek people continue to pay off the debts of the European elite. When the lessons of history are taught by rote, they can be easy to miss when most needed. This time, Europe must remember that the price of fostering fascism is crueller and costlier by far than any national debt.