Morrissey isn't comparing it to genocide - he's comparing it to propaganda.
I don't like the way he has phrased his point (I don't like it when anyone harks back to 1939 for any reason with a few notable exceptions - it's the standard cheap-shot and is only really valid in a few contemporary topics), but I do have some sympathy with it. While I did during my teens, patriotism isn't something I really have any time for any more, and I am a little suspicious of the rather convenient way national fervour is being drummed up, which he's also right to point out is a fairly classic strategy of power in modern history.
As for the olympics generally - I haven't been watching as it doesn't really interest me. But I respect the dedication and skill the various sportsmen display. But they're not winning it for me, and I dislike the idea that they are. They are winning it through and for their own skill and resolve, and they are examples of just what can be achieved with the right levels of willpower. That's beautiful enough - they don't need to have done it for my imagined community or on my behalf somehow.