The portly, helmeted mayor was pictured in his trademark black suit and shoes, holding two Union Jack flags and calling for a ladder in the drizzle as he dangled from the high-wire attraction favored by school children in London’s Victoria Park, where the Games are being shown on big screens.

“Unlike Team GB, he won’t be bagging any gold medals today,” said a spokeswoman for the mayor after the incident.

The zip wire incident earned Johnson a “trending” spot on microblogging site Twitter. But the eccentric mayor was not the Games’ only viral offering.

Another contender was a Youtube movie of the “happiest Olympic worker”.

That film, of a Games volunteer speaking through her megaphone to drum up excitement, has picked up nearly two million hits – more than the 1.1 million real world visitors expected in London as a result of the Games.

In it, a deadpan woman, apparently ignored by passers-by, says her mouth is dry with excitement at the Games. “I believe we’re all cheering on the inside,” she drones.

TAKE TO THE RAILS

Johnson’s stunt followed complaints from businesses that his exhortations to commuters to avoid Games-related hotspots on the London Underground may have been too effective. Some sites have said trade is down by as much as 30 percent.

A spokeswoman for Tube operator Transport for London said the change in the mayor’s messages had always been planned, “once we were through the first major test on Monday.”

Games organizers – who have said they expect visitors to spend an extra 235 million pounds ($366.33 million) in London and the United Kingdom during the Games – played down suggestions that the mayor’s travel warnings had prompted an Olympics-related mini recession in the capital.

The flow of vehicles on roads in London has fallen since the Games began as people turn to rail services to move around the packed capital, Olympic organizers said.

Tube journeys are 7.5 percent higher than usual, national rail services are up 5 percent, and traffic on the Docklands rail service to east London is up 65 percent at record levels. Road traffic in and around central London has fallen about 17 percent.

The transport system will come under increased pressure this weekend, with vast crowds expected to turn out as athletes compete for around 20 medals on “Super Saturday”.

“That is really going to test our capacity,” said Paul Deighton, chief executive of London organizers LOCOG.

(For the video: here)

($1 = 0.6415 British pounds)

(Reporting by Guy Faulconbridge and Avril Ormsby; writing by Sara Ledwith, editing by Justin Palmer)

The portly, helmeted mayor was pictured in his trademark
black suit and shoes, holding two Union Jack flags and calling
for a ladder in the drizzle as he dangled from the high-wire
attraction favoured by school children in London’s Victoria
Park, where the Games are being shown on big screens.

“Unlike Team GB, he won’t be bagging any gold medals today,”
said a spokeswoman for the mayor after the incident.

The zip wire incident earned Johnson a “trending” spot on
microblogging site Twitter. But the eccentric mayor was not the
Games’ only viral offering.

Another contender was a Youtube movie of the “happiest
Olympic worker”.

That film, of a Games volunteer speaking through her
megaphone to drum up excitement, has picked up nearly two
million hits – more than the 1.1 million real world visitors
expected in London as a result of the Games.

In it, a deadpan woman, apparently ignored by passers-by,
says her mouth is dry with excitement at the Games. “I believe
we’re all cheering on the inside,” she drones.

TAKE TO THE RAILS

Johnson’s stunt followed complaints from businesses that his
exhortations to commuters to avoid Games-related hotspots on the
London Underground may have been too effective. Some sites have
said trade is down by as much as 30 percent.

A spokeswoman for Tube operator Transport for London said
the change in the mayor’s messages had always been planned,
“once we were through the first major test on Monday.”

Games organisers – who have said they expect visitors to
spend an extra 235 million pounds ($366.33 million) in London
and the United Kingdom during the Games – played down
suggestions that the mayor’s travel warnings had prompted an
Olympics-related mini recession in the capital.

The flow of vehicles on roads in London has fallen since the
Games began as people turn to rail services to move around the
packed capital, Olympic organisers said.

Tube journeys are 7.5 percent higher than usual, national
rail services are up 5 percent, and traffic on the Docklands
rail service to east London is up 65 percent at record levels.
Road traffic in and around central London has fallen about 17
percent.

The transport system will come under increased pressure this
weekend, with vast crowds expected to turn out as athletes
compete for around 20 medals on “Super Saturday”.

“That is really going to test our capacity,” said Paul
Deighton, chief executive of London organisers LOCOG.

Studying his screen, he smiles briefly. “High pressure coming.”

Andy Page has the English gift of understatement. The lead weather forecaster for the London Olympics, he’s the man in charge of predicting conditions for key events from the 100 metres to the archery.

Page will coordinate a team of a dozen or so meteorologists at venues across the country as they grapple with England’s notoriously fickle climate.

Even at the best of times, it would be a challenge. So far, its been one of the worst. After the wettest June in a century, a warm spell finally arrived and in the days running up to the opening ceremony, had mushroomed into a heatwave.

Records for weather extremes have been smashed around the northern hemisphere, in a trend that government scientists say is connected to climate change.

People from Pellston in Michigan to Krymsk in Russia have been confronted by heat, drought, flood, violent storms and hot rain.

Against this backdrop, athletes may find themselves competing against the British weather.

Sprinters like Usain Bolt need warmth to excel, tennis players and horses need ground that’s not too soggy, and rowers and sailors need to be off the water if a storm hits.

As long as there’s no risk of lightning, most events — including the sprints — will go ahead whatever the weather. There is leeway to reschedule some, and organisers say spectators may bring a small umbrella.

“It’s just been non-stop,” said Page, who in 23 years of forecasting has found the weather this summer to be exceptionally capricious. “If the weather pattern was to carry on, obviously the pressure would be even more.”

DON’T MIND

People in England open conversations with the weather, which they have famously put up with since it helped them beat the French in battle in 1415.

It’s a focus from childhood on. A.A. Milne’s storybook character Pooh bear uses a balloon to pretend to be a raincloud, and a Beatles song, “Rain”, was one of the first pop videos.

But knowing when or where the rain is going to fall has always been the hardest.

“We say it’s going to be sunny spells but also scattered showers, and people think you’re just trying to get out of giving them any detail,” says Page, who works for the Met Office, the British government forecasting service that is providing location-specific weather advice for Olympic events.

“The problem is, the showers only have a life-cycle of about an hour to an hour and a half.”

Forecasters work 12-hour shifts — midnight to midday; midday to midnight — and run computer simulations based on an array of data including details from radars which pick up the echoes from rain drops, as well as new high-definition information collected at a finer scale.

One system Page uses is called the “ensemble”. It shows 50 different weather possibilities based on what’s happening now. Each simulation runs 54 hours ahead, and models the possible impact of the slightest imaginable change.

When most of the charts — forecasters call them ‘postage stamps’ — agree, the forecasters are more confident about their predictions.

“We’ve got an awful lot of information, and the skill these days is being able to sift that information rapidly,” says Page, whose career started out with observations plotted on sheets of paper for the Royal Air Force.

Experience helps. And timing is everything, especially for people out on water in potentially stormy conditions.

JET STREAM

In the Met Office canteen, fluffy model clouds hang from the high ceiling. Made with unbleached sheep’s wool, they’re a staff talking point, because some are dirty brown rather than fluffy white. But none are as dark as the clouds Britain has seen this summer.

“When it does rain, it is heavier,” Met Office climate scientists said in a note this month about the reasons for this year’s unpredictability.

That’s logical, said forecaster Dave Britton. The global temperature has increased by 0.7 degrees Celsius since the industrial revolution, and the amount of moisture in the atmosphere has increased by four to five percent since the 1970s.

But the other force behind this year’s freak weather is a phenomenon people have not needed to know about for years: the jet stream, a narrow band of fast-moving winds that runs from west to east across the Atlantic high up in the atmosphere.

In 2012 its been slower than usual, which has made its course more undulating.

Places like England are usually to the south of the jet stream in summer but this year, the stream has been nearer to the equator. That has trapped the country under Arctic air.

Many other places have also been affected: parts of the United States have been locked to the south of the stream, resulting in record heat and drought.

On a July 19 visit, Page’s models were suggesting the jet stream would return to its typical path, at least for a few days. Whether it stays will be significant for weather patterns, and he was not guessing.

“It’s changing all the time.”

It’s also not yet clear why the stream has been slow, although possible reasons include global warming, which reduces the temperature contrast between the frozen poles and the hot equator. A large chunk of glacier broke off in the Arctic recently.

SEED THE CLOUD?

Never mind predicting it, can’t British scientists just change the weather, like the Chinese did for some of the time at Beijing in 2008?

China says its cloud-seeding techniques made sure rain fell far away from the Games at crucial moments.

Its state planning agency, the National Development and Reform Administration, has earmarked around 340 million yuan for weather modification, which usually involves firing chemicals into clouds to encourage raindrops to form where you want rain.

The China Meteorological Administration did not respond to requests for comment on the London Games.

At the British Met Office, forecasters are sceptical about the science. They say there is not enough evidence that weather modification works to justify the expense.

But there’s also something very English about their response.

“That’s not what the weather’s about,” said forecaster Charles Powell. “It’s like trying to change the course of a river. The weather is going to do what it’s going to do, regardless.” (With additional reporting by David Stanway in Beijing; Editing by Greg Stutchbury)

Studying his screen, he smiles briefly. “High pressure coming.”

Andy Page has the English gift of understatement. The lead weather forecaster for the London Olympics, he’s the man in charge of predicting conditions for key events from the 100 meters to the archery.

Page will coordinate a team of a dozen or so meteorologists at venues across the country as they grapple with England’s notoriously fickle climate.

Even at the best of times, it would be a challenge. So far, it’s been one of the worst. After the wettest June in a century, a warm spell finally arrived and in the days running up to the opening ceremony, had mushroomed into a heat wave.

Records for weather extremes have been smashed around the northern hemisphere, in a trend that government scientists say is connected to climate change.

People from Pellston in Michigan to Krymsk in Russia have been confronted by heat, drought, flood, violent storms and hot rain.

Against this backdrop, athletes may find themselves competing against the British weather.

Sprinters like Usain Bolt need warmth to excel, tennis players and horses need ground that’s not too soggy, and rowers and sailors need to be off the water if a storm hits.

As long as there’s no risk of lightning, most events — including the sprints — will go ahead whatever the weather. There is leeway to reschedule some, and organizers say spectators may bring a small umbrella.

“It’s just been non-stop,” said Page, who in 23 years of forecasting has found the weather this summer to be exceptionally capricious. “If the weather pattern was to carry on, obviously the pressure would be even more.”

DON’T MIND

People in England open conversations with the weather, which they have famously put up with since it helped them beat the French in battle in 1415.

It’s a focus from childhood on. A.A. Milne’s storybook character Pooh bear uses a balloon to pretend to be a raincloud, and a Beatles song, “Rain”, was one of the first pop videos.

But knowing when or where the rain is going to fall has always been the hardest.

“We say it’s going to be sunny spells but also scattered showers, and people think you’re just trying to get out of giving them any detail,” says Page, who works for the Met Office, the British government forecasting service that is providing location-specific weather advice for Olympic events.

“The problem is, the showers only have a life-cycle of about an hour to an hour and a half.”

Forecasters work 12-hour shifts — midnight to midday; midday to midnight — and run computer simulations based on an array of data including details from radars which pick up the echoes from rain drops, as well as new high-definition information collected at a finer scale.

One system Page uses is called the “ensemble”. It shows 50 different weather possibilities based on what’s happening now. Each simulation runs 54 hours ahead, and models the possible impact of the slightest imaginable change.

When most of the charts — forecasters call them ‘postage stamps’ — agree, the forecasters are more confident about their predictions.

“We’ve got an awful lot of information, and the skill these days is being able to sift that information rapidly,” says Page, whose career started out with observations plotted on sheets of paper for the Royal Air Force.

Experience helps. And timing is everything, especially for people out on water in potentially stormy conditions.

JET STREAM

In the Met Office canteen, fluffy model clouds hang from the high ceiling. Made with unbleached sheep’s wool, they’re a staff talking point, because some are dirty brown rather than fluffy white. But none are as dark as the clouds Britain has seen this summer.

“When it does rain, it is heavier,” Met Office climate scientists said in a note this month about the reasons for this year’s unpredictability.

That’s logical, said forecaster Dave Britton. The global temperature has increased by 0.7 degrees Celsius since the industrial revolution, and the amount of moisture in the atmosphere has increased by four to five percent since the 1970s.

But the other force behind this year’s freak weather is a phenomenon people have not needed to know about for years: the jet stream, a narrow band of fast-moving winds that runs from west to east across the Atlantic high up in the atmosphere.

In 2012 its been slower than usual, which has made its course more undulating.

Places like England are usually to the south of the jet stream in summer but this year, the stream has been nearer to the equator. That has trapped the country under Arctic air.

Many other places have also been affected: parts of the United States have been locked to the south of the stream, resulting in record heat and drought.

On a July 19 visit, Page’s models were suggesting the jet stream would return to its typical path, at least for a few days. Whether it stays will be significant for weather patterns, and he was not guessing.

“It’s changing all the time.”

It’s also not yet clear why the stream has been slow, although possible reasons include global warming, which reduces the temperature contrast between the frozen poles and the hot equator. A large chunk of glacier broke off in the Arctic recently.

SEED THE CLOUD?

Never mind predicting it, can’t British scientists just change the weather, like the Chinese did for some of the time at Beijing in 2008?

China says its cloud-seeding techniques made sure rain fell far away from the Games at crucial moments.

Its state planning agency, the National Development and Reform Administration, has earmarked around 340 million yuan ($54 million) for weather modification, which usually involves firing chemicals into clouds to encourage raindrops to form where you want rain.

The China Meteorological Administration did not respond to requests for comment on the London Games.

At the British Met Office, forecasters are skeptical about the science. They say there is not enough evidence that weather modification works to justify the expense.

But there’s also something very English about their response.

“That’s not what the weather’s about,” said forecaster Charles Powell. “It’s like trying to change the course of a river. The weather is going to do what it’s going to do, regardless.”

(With additional reporting by David Stanway in Beijing; Editing by Greg Stutchbury)

Studying his screen, he smiles briefly. “High pressure
coming.”

Andy Page has the English gift of understatement. The lead
weather forecaster for the London Olympics, he’s the man in
charge of predicting conditions for key events from the 100
metres to the archery.

Page will coordinate a team of a dozen or so meteorologists
at venues across the country as they grapple with England’s
notoriously fickle climate.

Even at the best of times, it would be a challenge. So far,
its been one of the worst. After the wettest June in a century,
a warm spell finally arrived and in the days running up to the
opening ceremony, had mushroomed into a heatwave.

Records for weather extremes have been smashed around the
northern hemisphere, in a trend that government scientists say
is connected to climate change.

People from Pellston in Michigan to Krymsk in Russia have
been confronted by heat, drought, flood, violent storms and hot
rain.

Against this backdrop, athletes may find themselves
competing against the British weather.

Sprinters like Usain Bolt need warmth to excel, tennis
players and horses need ground that’s not too soggy, and rowers
and sailors need to be off the water if a storm hits.

As long as there’s no risk of lightning, most events –
including the sprints — will go ahead whatever the weather.
There is leeway to reschedule some, and organisers say
spectators may bring a small umbrella.

“It’s just been non-stop,” said Page, who in 23 years of
forecasting has found the weather this summer to be
exceptionally capricious. “If the weather pattern was to carry
on, obviously the pressure would be even more.”

DON’T MIND

People in England open conversations with the weather, which
they have famously put up with since it helped them beat the
French in battle in 1415.

It’s a focus from childhood on. A.A. Milne’s storybook
character Pooh bear uses a balloon to pretend to be a raincloud,
and a Beatles song, “Rain”, was one of the first pop videos.

But knowing when or where the rain is going to fall has
always been the hardest.

“We say it’s going to be sunny spells but also scattered
showers, and people think you’re just trying to get out of
giving them any detail,” says Page, who works for the Met
Office, the British government forecasting service that is
providing location-specific weather advice for Olympic events.

“The problem is, the showers only have a life-cycle of about
an hour to an hour and a half.”

Forecasters work 12-hour shifts — midnight to midday;
midday to midnight — and run computer simulations based on an
array of data including details from radars which pick up the
echoes from rain drops, as well as new high-definition
information collected at a finer scale.

One system Page uses is called the “ensemble”. It shows 50
different weather possibilities based on what’s happening now.
Each simulation runs 54 hours ahead, and models the possible
impact of the slightest imaginable change.

When most of the charts — forecasters call them ‘postage
stamps’ — agree, the forecasters are more confident about their
predictions.

“We’ve got an awful lot of information, and the skill these
days is being able to sift that information rapidly,” says Page,
whose career started out with observations plotted on sheets of
paper for the Royal Air Force.

Experience helps. And timing is everything, especially for
people out on water in potentially stormy conditions.

JET STREAM

In the Met Office canteen, fluffy model clouds hang from the
high ceiling. Made with unbleached sheep’s wool, they’re a staff
talking point, because some are dirty brown rather than fluffy
white. But none are as dark as the clouds Britain has seen this
summer.

“When it does rain, it is heavier,” Met Office climate
scientists said in a note this month about the reasons for this
year’s unpredictability.

That’s logical, said forecaster Dave Britton. The global
temperature has increased by 0.7 degrees Celsius since the
industrial revolution, and the amount of moisture in the
atmosphere has increased by four to five percent since the
1970s.

But the other force behind this year’s freak weather is a
phenomenon people have not needed to know about for years: the
jet stream, a narrow band of fast-moving winds that runs from
west to east across the Atlantic high up in the atmosphere.

In 2012 its been slower than usual, which has made its
course more undulating.

Places like England are usually to the south of the jet
stream in summer but this year, the stream has been nearer to
the equator. That has trapped the country under Arctic air.

Many other places have also been affected: parts of the
United States have been locked to the south of the stream,
resulting in record heat and drought.

On a July 19 visit, Page’s models were suggesting the jet
stream would return to its typical path, at least for a few
days. Whether it stays will be significant for weather patterns,
and he was not guessing.

“It’s changing all the time.”

It’s also not yet clear why the stream has been slow,
although possible reasons include global warming, which reduces
the temperature contrast between the frozen poles and the hot
equator. A large chunk of glacier broke off in the Arctic
recently.

SEED THE CLOUD?

Never mind predicting it, can’t British scientists just
change the weather, like the Chinese did for some of the time at
Beijing in 2008?

China says its cloud-seeding techniques made sure rain fell
far away from the Games at crucial moments.

Its state planning agency, the National Development and
Reform Administration, has earmarked around 340 million yuan
($54 million) for weather modification, which usually involves
firing chemicals into clouds to encourage raindrops to form
where you want rain.

The China Meteorological Administration did not respond to
requests for comment on the London Games.

At the British Met Office, forecasters are sceptical about
the science. They say there is not enough evidence that weather
modification works to justify the expense.

But there’s also something very English about their
response.

“That’s not what the weather’s about,” said forecaster
Charles Powell. “It’s like trying to change the course of a
river. The weather is going to do what it’s going to do,
regardless.”

(With additional reporting by David Stanway in Beijing; Editing
by Greg Stutchbury)

In September 2008, the same month that Lehman Brothers collapsed, the Argentinian ants became the unwitting stars of a German television show that set out to illustrate collective efficiency. To the frustration of the show’s producers, the insects ended up showing how easily rational expectations can go awry.

The ants – Linepithema humile – had a choice between a long route and a short one to get to a pile of food. In theory, their chemical communication and millions of years of evolution should have led them to work out the short route.

They chose the long one, and most kept using it even though some had found the shorter path. “The Germans were furious,” said economics professor Alan Kirman, whose neuroscientist friend and colleague Guy Theraulaz ran the experiments in the south of France.

Kirman, professor emeritus at Aix Marseille University and France’s Ecole des Hautes Etudes en Sciences Sociales, has started to use the footage in a talk he gives about modern economic thinking. The insects were far from efficient, he said, but reached their goal in the end.

“I think the economy is a lot like that.”

There lies a hint of the revolution that is building at the heart of academic economics, particularly in Europe.

As the euro zone crisis deepens, economists in France, Germany and Italy have been forced to turn away from classroom theories and look at the real world – from insects to financial markets, from banks to brain scans – to better understand what’s going on. An increasing number of teachers argue that the textbooks, some by experts who didn’t see the crisis coming, are divorced from reality, inconsistent, dull, and, in a crisis that has gripped the globe for more than four years, even dangerous.

“A crisis is a wonderful opportunity in some sense,” said Kirman. “If it weren’t for the fact that millions of people are suffering as a result, what better time to be an economist, because now you can see what’s going wrong with our theory.”

For PDF: click link.reuters.com/fuj29s

ROBOT BREAKDOWN

To suggest economies were not generally efficient would, until very recently, have been heresy in many classes.

The modern theoretical framework began to emerge in the 1980s by Nobel Prize winner Robert Lucas, the John Dewey Distinguished Service Professor of Economics at the University of Chicago. Lucas said economic models should be something you could put on a computer and run – “a mechanical artificial world populated by interacting robots.” If it wasn’t in the model, it couldn’t happen. The collapse of the financial system, for example.

Others helped build on this idea. New Keynesians took a slightly different tack, including assumptions about market failure but still resting on the idea people behave rationally.

After the turn of the century, Lucas even suggested economists had cracked one of the profession’s biggest questions. “The central problem of depression-prevention has been solved,” he wrote in 2003.

Four years later, Roger Farmer, a professor of economics at the University of California in Los Angeles, was at a dinner at the Bank of England to celebrate the “Great Moderation”, a term coined to describe an era in which some politicians claimed monetary policy had ended boom and bust. “We had entered a new era of economic prosperity,” he recalled in a paper this February.

That night, British building society Northern Rock went under, heralding the start of Europe’s crisis and a global backlash against economists.

Why didn’t they see it coming, the Queen of England asked on a 2008 visit to the London School of Economics. “The Economist” magazine wrote of a “dark age of macroeconomics”.

Economists began to ask how the profession had been blind to the fact that its theories were leading people down the wrong path – rather like Kirman’s ants.

That debate continues, charged with political thunder. Diane Coyle, a UK-based economic consultant who is compiling a book on how economics teaching needs to change after the crisis, says it can’t be separated from a backlash in Europe against free market liberalism. But whatever their politics, a significant number of economics teachers in both Europe and the United States think it’s time for a new, more pragmatic approach.

Around one in five respondents to a 2010 survey of economics instructors by the St Gallen university in Switzerland said their profession needed a “major reorientation or new paradigm.” Even those who thought the curriculum was more or less fine said they had started paying more attention to financial markets, banks or speculative bubbles, and included real world context.

Last year Coyle organised a conference on teaching post-crisis economics. Topics ranged from high theory to whether economists could expect to find employment.

Most economists graduating today would not be equipped to read the Financial Times, according to British economist John Kay, who argued they have for too long conflated the abstract and the real.

“CHERISHED BELIEFS”

On a wall in the lobby of the Bocconi University in Milan, the script on an artwork plays on a Christian prayer:

“Et Dimitte Nobis Debita Nostra.” (And forgive us our debts)

Established in 1902, Bocconi was the first university in Italy to grant a degree in economics. Prime Minister Mario Monti was rector there from 1989 to 1994 and dozens of top Italian officials and bankers have attended. It is, in most ways, a cathedral to orthodox economic thinking.

That’s now changing.

“All the macroeconomic paradigms have been put in discussion since the 2007 crisis,” said Stefano Gatti, its Director of Bachelor of Economics and Finance.

Bocconi students use a European edition of a leading textbook by Olivier Blanchard, the IMF’s chief economist. Like the other main volume, by Harvard professor Gregory Mankiw, it has been updated to take in the crisis. But an update may not be enough.

Blanchard, who in August 2008 had declared that “the state of macroeconomics is good”, wrote in a 2011 blog that “our most cherished beliefs” had been brought into question by the crisis.

“The paradigm that the market corrects itself, on which all the traditional economists such as Blanchard and Mankiw base their theories, is on the rocks,” said Gatti. “What the traditional theories do not consider is that the financial market must be regulated. A too-liberalised market creates monsters.”

Both Blanchard and Mankiw declined to comment for this article.

Francesco Saita, dean of Bocconi’s Graduate School and professor of financial markets and institutions, said teachers are bringing newspapers and academic papers into class, and Bocconi has invited leading bankers and economists to address students.

“Students need fewer economic models and more methods to understand the uncertainty,” said Giovanni Valotti, professor of public management.

Alessandro Cofano, a third-year economics student, said questions are constantly raised about why the formulae and graphics published in the manuals cannot be found in real life.

“TERRIBLY FLAWED”

The drive for change is also evident in Germany, where Professor Peter Bofinger is passionate about the shortcomings of the main texts. Bofinger is head of monetary policy and international economics at the University of Wuerzburg and one of five “wise men” who formally advise Chancellor Angela Merkel.

He also thinks most text books are dangerous.

The author of a textbook himself, he didn’t bother to read the modern texts, he said. But last year, he did a systematic analysis, and what he found shocked him.

“To me the most astonishing thing was that all these textbooks do not find an analytical explanation of unemployment,” he said. “I was really amazed.”

Up to one in four people can’t find work in parts of Europe, and the reality of people who are unemployed without choosing to be is one of the biggest holes in mainstream theory, for Bofinger and others. In orthodox teaching, supply and demand in the labour markets should fix unemployment leaving just those people who choose not to work in the dole queue.

Bofinger also finds it incredible that the standard model does not allow for people to behave in a way that reflects uncertainty about the future. According to the theory, a Spanish person losing their job today, for instance, would act as if they knew they would find another job within a year.

In reality, it may take far longer: one of several truths economists say is ignored by the main theory.

“It’s so terribly flawed,” said Bofinger. “If students of medicine would learn such rubbish, you would be afraid to go to your doctor, no?”

THRILL OF THE MIDDLE

Most economists reject such wholesale criticism. But they do question how far the conventional approach to modelling has blinded people, Coyle says. “The gap between the interesting questions or real-world problems and the workhorse economics being taught to students at all levels has become a chasm.”

Simon Evenett, professor of international trade and economic development at St Gallen University, said macroeconomists had ignored the financial system in most of their models, and the finance guys missed economic linkages. “That intellectual separation has been the cause of a lot of misdiagnoses.”

London School of Economics economics professor Charles Goodhart told a conference macroeconomists had been “totally and egregiously hopeless.” Their assumption that everyone in an economy can borrow at the same risk-free rate “blows one’s mind, the degree of intellectual error.”

Kirman was a theoretician until the mid-1970s and now studies behavioural economics, a branch of the discipline that began questioning mainstream theories long before the crisis.

He and a group of like-minded scientists are working on a project that focuses on the flaws in big economic theories and in economists’ understanding of financial markets. He has used insect behaviour as the basis of insights into different economic models.

Kirman and others think it might be beneficial to look at how individuals interact and work together in networks. Such thinking is still fringe, though influential figures such as Jean Claude Trichet, the former governor of the European Central Bank, and UK central banker Andrew Haldane, have taken an interest.

Haldane co-wrote a 2011 study of how the work of ecologists could be used to understand the risks in the financial system. He has argued that looking at the way people interact – for instance, by anticipating what others will do – could provide a more sound basis for prediction than economists’ current models.

Such thinking sits right in between the two main areas of the discipline: macroeconomics and microeconomics.

“When you teach students nowadays you teach them microeconomics and macroeconomics – what happens to the individual and what happens on the aggregate level – and you don’t worry about what happens in between the two because you assume that the aggregate behaves like one individual,” Kirman said. “What I would argue is that all the interesting stuff happens in the middle – the interaction between people and the changes that occur.”

Kirman is one of many who think such ideas will start to change the ‘dismal science’. Others, including UCLA’s Farmer, believe the greater availability of data online can help reshape economics completely. Digital processing, he believes, will do for economics what the telescope did for astronomy. “The way we teach our students will be changed in a fundamental way by the lessons we learn from the current crisis,” he said.

For Paul Seabright, Professor of Economics at the University of Toulouse, the crisis has highlighted the way economists have long been hungry for something more “grounded in the scientific method.”

New tools from psychology and neuroscience can show what really motivates people, he said. For example, it’s well established that people in financial markets are strongly influenced by their testosterone levels. “Textbook economic man is only influenced by the returns and the risk.”

As trillions of euros are piled into failing banks, many economists think their profession needs to get a lot more humble. “We need people whose idea of the big picture isn’t based on some dominating gestalt that forces the detailed evidence to fit a big frame,” said Seabright.

The Argentinian ants certainly didn’t fit the frame. Theraulaz, who specialises in swarm intelligence, believes they were probably deterred by strong lights shining onto the shorter path that the film crew wanted them to take. Then the presence of chemicals on the longer path created a precedent.

Would they otherwise have chosen the short route? “No,” said Theraulaz. “The initial choice is made at random.”

(Antonella Ciancio reported from Milan; Additional reporting by Robert-Jan Bartunek in Brussels, Alessandra Prentice, David Milliken and Alan Wheatley in London; Editing by Simon Robinson and Richard Woods)

In September 2008, the same month that Lehman Brothers collapsed, the Argentinian ants became the unwitting stars of a German television show that set out to illustrate collective efficiency. To the frustration of the show’s producers, the insects ended up showing how easily rational expectations can go awry.

The ants – Linepithema humile – had a choice between a long route and a short one to get to a pile of food. In theory, their chemical communication and millions of years of evolution should have led them to work out the short route.

They chose the long one, and most kept using it even though some had found the shorter path. “The Germans were furious,” said economics professor Alan Kirman, whose neuroscientist friend and colleague Guy Theraulaz ran the experiments in the south of France.

Kirman, professor emeritus at Aix Marseille University and France’s Ecole des Hautes Etudes en Sciences Sociales, has started to use the footage in a talk he gives about modern economic thinking. The insects were far from efficient, he said, but reached their goal in the end.

“I think the economy is a lot like that.”

There lies a hint of the revolution that is building at the heart of academic economics, particularly in Europe.

As the euro zone crisis deepens, economists in France, Germany and Italy have been forced to turn away from classroom theories and look at the real world – from insects to financial markets, from banks to brain scans – to better understand what’s going on. An increasing number of teachers argue that the textbooks, some by experts who didn’t see the crisis coming, are divorced from reality, inconsistent, dull, and, in a crisis that has gripped the globe for more than four years, even dangerous.

“A crisis is a wonderful opportunity in some sense,” said Kirman. “If it weren’t for the fact that millions of people are suffering as a result, what better time to be an economist, because now you can see what’s going wrong with our theory.”

ROBOT BREAKDOWN

To suggest economies were not generally efficient would, until very recently, have been heresy in many classes.

The modern theoretical framework began to emerge in the 1980s by Nobel Prize winner Robert Lucas, the John Dewey Distinguished Service Professor of Economics at the University of Chicago. Lucas said economic models should be something you could put on a computer and run – “a mechanical artificial world populated by interacting robots.” If it wasn’t in the model, it couldn’t happen. The collapse of the financial system, for example.

Others helped build on this idea. New Keynesians took a slightly different tack, including assumptions about market failure but still resting on the idea people behave rationally.

After the turn of the century, Lucas even suggested economists had cracked one of the profession’s biggest questions. “The central problem of depression-prevention has been solved,” he wrote in 2003.

Four years later, Roger Farmer, a professor of economics at the University of California in Los Angeles, was at a dinner at the Bank of England to celebrate the “Great Moderation”, a term coined to describe an era in which some politicians claimed monetary policy had ended boom and bust. “We had entered a new era of economic prosperity,” he recalled in a paper this February.

That night, British building society Northern Rock went under, heralding the start of Europe’s crisis and a global backlash against economists.

Why didn’t they see it coming, the Queen of England asked on a 2008 visit to the London School of Economics. “The Economist” magazine wrote of a “dark age of macroeconomics”.

Economists began to ask how the profession had been blind to the fact that its theories were leading people down the wrong path – rather like Kirman’s ants.

That debate continues, charged with political thunder. Diane Coyle, a UK-based economic consultant who is compiling a book on how economics teaching needs to change after the crisis, says it can’t be separated from a backlash in Europe against free market liberalism. But whatever their politics, a significant number of economics teachers in both Europe and the United States think it’s time for a new, more pragmatic approach.

Around one in five respondents to a 2010 survey of economics instructors by the St Gallen university in Switzerland said their profession needed a “major reorientation or new paradigm.” Even those who thought the curriculum was more or less fine said they had started paying more attention to financial markets, banks or speculative bubbles, and included real world context.

Last year Coyle organized a conference on teaching post-crisis economics. Topics ranged from high theory to whether economists could expect to find employment.

Most economists graduating today would not be equipped to read the Financial Times, according to British economist John Kay, who argued they have for too long conflated the abstract and the real.

“CHERISHED BELIEFS”

On a wall in the lobby of the Bocconi University in Milan, the script on an artwork plays on a Christian prayer:

“Et Dimitte Nobis Debita Nostra.” (And forgive us our debts)

Established in 1902, Bocconi was the first university in Italy to grant a degree in economics. Prime Minister Mario Monti was rector there from 1989 to 1994 and dozens of top Italian officials and bankers have attended. It is, in most ways, a cathedral to orthodox economic thinking.

That’s now changing.

“All the macroeconomic paradigms have been put in discussion since the 2007 crisis,” said Stefano Gatti, its Director of Bachelor of Economics and Finance.

Bocconi students use a European edition of a leading textbook by Olivier Blanchard, the IMF’s chief economist. Like the other main volume, by Harvard professor Gregory Mankiw, it has been updated to take in the crisis. But an update may not be enough.

Blanchard, who in August 2008 had declared that “the state of macroeconomics is good”, wrote in a 2011 blog that “our most cherished beliefs” had been brought into question by the crisis.

“The paradigm that the market corrects itself, on which all the traditional economists such as Blanchard and Mankiw base their theories, is on the rocks,” said Gatti. “What the traditional theories do not consider is that the financial market must be regulated. A too-liberalized market creates monsters.”

Both Blanchard and Mankiw declined to comment for this article.

Francesco Saita, dean of Bocconi’s Graduate School and professor of financial markets and institutions, said teachers are bringing newspapers and academic papers into class, and Bocconi has invited leading bankers and economists to address students.

“Students need fewer economic models and more methods to understand the uncertainty,” said Giovanni Valotti, professor of public management.

Alessandro Cofano, a third-year economics student, said questions are constantly raised about why the formulae and graphics published in the manuals cannot be found in real life.

“TERRIBLY FLAWED”

The drive for change is also evident in Germany, where Professor Peter Bofinger is passionate about the shortcomings of the main texts. Bofinger is head of monetary policy and international economics at the University of Wuerzburg and one of five “wise men” who formally advise Chancellor Angela Merkel.

He also thinks most text books are dangerous.

The author of a textbook himself, he didn’t bother to read the modern texts, he said. But last year, he did a systematic analysis, and what he found shocked him.

“To me the most astonishing thing was that all these textbooks do not find an analytical explanation of unemployment,” he said. “I was really amazed.”

Up to one in four people can’t find work in parts of Europe, and the reality of people who are unemployed without choosing to be is one of the biggest holes in mainstream theory, for Bofinger and others. In orthodox teaching, supply and demand in the labor markets should fix unemployment leaving just those people who choose not to work in the dole queue.

Bofinger also finds it incredible that the standard model does not allow for people to behave in a way that reflects uncertainty about the future. According to the theory, a Spanish person losing their job today, for instance, would act as if they knew they would find another job within a year.

In reality, it may take far longer: one of several truths economists say is ignored by the main theory.

“It’s so terribly flawed,” said Bofinger. “If students of medicine would learn such rubbish, you would be afraid to go to your doctor, no?”

THRILL OF THE MIDDLE

Most economists reject such wholesale criticism. But they do question how far the conventional approach to modeling has blinded people, Coyle says. “The gap between the interesting questions or real-world problems and the workhorse economics being taught to students at all levels has become a chasm.”

Simon Evenett, professor of international trade and economic development at St Gallen University, said macroeconomists had ignored the financial system in most of their models, and the finance guys missed economic linkages. “That intellectual separation has been the cause of a lot of misdiagnoses.”

London School of Economics economics professor Charles Goodhart told a conference macroeconomists had been “totally and egregiously hopeless.” Their assumption that everyone in an economy can borrow at the same risk-free rate “blows one’s mind, the degree of intellectual error.”

Kirman was a theoretician until the mid-1970s and now studies behavioural economics, a branch of the discipline that began questioning mainstream theories long before the crisis.

He and a group of like-minded scientists are working on a project that focuses on the flaws in big economic theories and in economists’ understanding of financial markets. He has used insect behaviour as the basis of insights into different economic models.

Kirman and others think it might be beneficial to look at how individuals interact and work together in networks. Such thinking is still fringe, though influential figures such as Jean Claude Trichet, the former governor of the European Central Bank, and UK central banker Andrew Haldane, have taken an interest.

Haldane co-wrote a 2011 study of how the work of ecologists could be used to understand the risks in the financial system. He has argued that looking at the way people interact – for instance, by anticipating what others will do – could provide a more sound basis for prediction than economists’ current models.

Such thinking sits right in between the two main areas of the discipline: macroeconomics and microeconomics.

“When you teach students nowadays you teach them microeconomics and macroeconomics – what happens to the individual and what happens on the aggregate level – and you don’t worry about what happens in between the two because you assume that the aggregate behaves like one individual,” Kirman said. “What I would argue is that all the interesting stuff happens in the middle – the interaction between people and the changes that occur.”

Kirman is one of many who think such ideas will start to change the ‘dismal science’. Others, including UCLA’s Farmer, believe the greater availability of data online can help reshape economics completely. Digital processing, he believes, will do for economics what the telescope did for astronomy. “The way we teach our students will be changed in a fundamental way by the lessons we learn from the current crisis,” he said.

For Paul Seabright, Professor of Economics at the University of Toulouse, the crisis has highlighted the way economists have long been hungry for something more “grounded in the scientific method.”

New tools from psychology and neuroscience can show what really motivates people, he said. For example, it’s well established that people in financial markets are strongly influenced by their testosterone levels. “Textbook economic man is only influenced by the returns and the risk.”

As trillions of euros are piled into failing banks, many economists think their profession needs to get a lot more humble. “We need people whose idea of the big picture isn’t based on some dominating gestalt that forces the detailed evidence to fit a big frame,” said Seabright.

The Argentinian ants certainly didn’t fit the frame. Theraulaz, who specialises in swarm intelligence, believes they were probably deterred by strong lights shining onto the shorter path that the film crew wanted them to take. Then the presence of chemicals on the longer path created a precedent.

Would they otherwise have chosen the short route? “No,” said Theraulaz. “The initial choice is made at random.”

(Antonella Ciancio reported from Milan; Additional reporting by Robert-Jan Bartunek in Brussels, Alessandra Prentice, David Milliken and Alan Wheatley in London; Editing by Simon Robinson and Richard Woods)

It is hardly the image of sporting prowess but the place, conjured by Charles Dickens, underpins important historical context for the 2012 Games and a reality that endures.

The characters who visited this tavern “of dropsical appearance” in the 1860s novel “Our Mutual Friend”, lived in the parts of London where 2012 will be staged, and included archetypes like the people in “The adventures of Oliver Twist” – young innocents and scoundrels living rough lives.

A few streets from the pub, beneath the docklands railway, Dickens scholar Tony Williams shows a reporter a trim terrace of whitewashed houses.

This part of London – Limehouse – was where Dickens’ godfather, who made rigging for ships, had a home. When Charles came to visit he called in on a nearby lead mill that employed mainly women – poisoning some – a children’s hospital, and various households.

Such places today are within sight of the pyramid-topped tower of London’s financial powerhouse Canary Wharf, and attract valuations comparable to the financial district of Manhattan.

That puts them out of reach of most people, especially residents of the boroughs that are hosting the Games. Here, up to one in two children live in poverty, according to local council data.

Unemployment in Newham, one of the poorest boroughs, is nearly 45 percent – the highest rate in the country. Life expectancy is about two years below the UK average; Newham has Britain’s highest rate of tuberculosis diagnoses.

London is full of memories of Victorian England, an era of dramatic extremes of wealth and poverty. A short walk through east London in the company of Dickens brings to mind a world whose poverty and squalor the author exposed more than 150 years ago; poverty which has only partially been redressed.

HALLSVILLE CESSPOOLS

In Dickens’ time, east London was foul. The Metropolitan Building Act of 1844 had pushed toxic industries like leather tanning, varnish-making and gas works to the east.

There was also a big problem with sewage. Olympics spectators who walk a route known as the Greenway to get to the Park will stride over the solution to that. The path is part of a network that was finally constructed after the stench became intolerable in parliament.

At Canning Town, a couple of train stops south of Olympic Park, the area’s potential collides with a Dickensian past. It is still the poorest part of Newham.

In 1857 the slum featured in “Household Words”, a weekly journal that Dickens edited and published. Part of the low-lying area was known as Hallsville.

“It is a district … most safely to be explored on stilts,” the journal says. A clergyman “once lost his shoes in the mud while visiting Hallsville, and did not know that they were gone till some time afterwards; so thickly were his feet encased in knobs of mud.”

On a drier day, the main characteristic of the place was its cesspools, undrained and pestilential, in the backyards of cheap terraced houses.

“In one of the backyards, three ghostly little children lying on the ground, hung with their faces over it, breathing the poison of the bubbles as it rose, and fishing about with their hands in the filth for something – perhaps for something nice to eat.”

Dickens was a radical, Williams says.

“The greatest thing he hated to see was people being indifferent or just ignorant about where there was a need to be met – and particularly where that affected children.”

When Dickens was a child, education of any kind was only for the privileged: he spent several years roaming the streets, and had to work in a boot-polish factory when his father was jailed for debts.

COCKROACH AND CARPET

Emerge from Canning Town station today and the whiff is more likely one of tar from a passing truck carrying material to a building site. As you head for Hallsville, a newly built apartment block rises opposite a disused transport depot marked for regeneration.

But housing remains a problem. In 2009 almost one in five households in Newham was overcrowded – having at least one room less than needed. Around half were below the standard known as Decent, and many are privately owned and rented out for more than they are worth.

“Something nice to eat” can still be hard to come by, especially fresh fruit and vegetables. Shops selling only frozen or dried goods survive better in poor areas, and in Newham, the lowest-paid earned less than anywhere else in London in 2007-9.

“We talk about a ‘food desert’ in some areas,” said Rachel Laurence, who works with a child poverty network for the charity Save the Children.

Hallsville Primary School still exists. On a rainy April morning, a teacher leads a class past green fields out through spiky metal gates, on their way to a swimming lesson.

“Wowee what a fannetastic school,” reads a review on Google maps. The school was rated “outstanding” by the British schools inspector in 2008.

Inside, one of the first sights are more than 30 trophies and plaques for sports, and large brightly coloured models of London landmarks. A bicycle wheel stuck with knobs like those used on cupboard doors represents the millennium wheel in Westminster.

The plaque commemorating a cheerleading prize says “Be the best you can be.”

Keri Edge, who has been head teacher for 12 years, says just over half of the 450 or so pupils are eligible for free school meals – a measure of poverty.

Problems they contend with are broken homes, overcrowding, a lack of routine, broken sleep patterns, poor diet, and a lack of human contact because relatives spend too much time on smart phones or tech toys.

Edge finds it charming that Dickens knew about her school. But she wants to emphasise how modern children can be deprived whether or not they are poor, particularly if they are left “with just a Wii for company”.

The classrooms hum with calm activity. In the nursery, a boy and a girl measure minutes with sand timers. In the corridors, the pupils move from class to class in silent crocodiles. “Lovely manners,” the teachers say. The 10-year olds are working on a story. One has written of “a melodious sombre composition so sweet it would turn a devil into an angel.”

Around the corner, just outside the school fence, is a burned-out car.

(Editing by Peter Rutherford)

It is hardly the image of sporting prowess but the place,
conjured by Charles Dickens, underpins important historical
context for the 2012 Games and a reality that endures.

The characters who visited this tavern “of dropsical
appearance” in the 1860s novel “Our Mutual Friend”, lived in the
parts of London where 2012 will be staged, and included
archetypes like the people in “The adventures of Oliver Twist” -
young innocents and scoundrels living rough lives.

A few streets from the pub, beneath the docklands railway,
Dickens scholar Tony Williams shows a reporter a trim terrace of
whitewashed houses.

This part of London – Limehouse – was where Dickens’
godfather, who made rigging for ships, had a home. When Charles
came to visit he called in on a nearby lead mill that employed
mainly women – poisoning some – a children’s hospital, and
various households.

Such places today are within sight of the pyramid-topped
tower of London’s financial powerhouse Canary Wharf, and attract
valuations comparable to the financial district of Manhattan.

That puts them out of reach of most people, especially
residents of the boroughs that are hosting the Games. Here, up
to one in two children live in poverty, according to local
council data.

Unemployment in Newham, one of the poorest boroughs, is
nearly 45 percent – the highest rate in the country. Life
expectancy is about two years below the UK average; Newham has
Britain’s highest rate of tuberculosis diagnoses.

London is full of memories of Victorian England, an era of
dramatic extremes of wealth and poverty. A short walk through
east London in the company of Dickens brings to mind a world
whose poverty and squalor the author exposed more than 150 years
ago; poverty which has only partially been redressed.

HALLSVILLE CESSPOOLS

In Dickens’ time, east London was foul. The Metropolitan
Building Act of 1844 had pushed toxic industries like leather
tanning, varnish-making and gas works to the east.

There was also a big problem with sewage. Olympics
spectators who walk a route known as the Greenway to get to the
Park will stride over the solution to that. The path is part of
a network that was finally constructed after the stench became
intolerable in parliament.

At Canning Town, a couple of train stops south of Olympic
Park, the area’s potential collides with a Dickensian past. It
is still the poorest part of Newham.

In 1857 the slum featured in “Household Words”, a weekly
journal that Dickens edited and published. Part of the low-lying
area was known as Hallsville.

“It is a district … most safely to be explored on stilts,”
the journal says. A clergyman “once lost his shoes in the mud
while visiting Hallsville, and did not know that they were gone
till some time afterwards; so thickly were his feet encased in
knobs of mud.”

On a drier day, the main characteristic of the place was its
cesspools, undrained and pestilential, in the backyards of cheap
terraced houses.

“In one of the backyards, three ghostly little children
lying on the ground, hung with their faces over it, breathing
the poison of the bubbles as it rose, and fishing about with
their hands in the filth for something – perhaps for something
nice to eat.”

Dickens was a radical, Williams says.

“The greatest thing he hated to see was people being
indifferent or just ignorant about where there was a need to be
met – and particularly where that affected children.”

When Dickens was a child, education of any kind was only for
the privileged: he spent several years roaming the streets, and
had to work in a boot-polish factory when his father was jailed
for debts.

COCKROACH AND CARPET

Emerge from Canning Town station today and the whiff is more
likely one of tar from a passing truck carrying material to a
building site. As you head for Hallsville, a newly built
apartment block rises opposite a disused transport depot marked
for regeneration.

But housing remains a problem. In 2009 almost one in five
households in Newham was overcrowded – having at least one room
less than needed. Around half were below the standard known as
Decent, and many are privately owned and rented out for more
than they are worth.

“Something nice to eat” can still be hard to come by,
especially fresh fruit and vegetables. Shops selling only frozen
or dried goods survive better in poor areas, and in Newham, the
lowest-paid earned less than anywhere else in London in 2007-9.

“We talk about a ‘food desert’ in some areas,” said Rachel
Laurence, who works with a child poverty network for the charity
Save the Children.

Hallsville Primary School still exists. On a rainy April
morning, a teacher leads a class past green fields out through
spiky metal gates, on their way to a swimming lesson.

“Wowee what a fannetastic school,” reads a review on Google
maps. The school was rated “outstanding” by the British schools
inspector in 2008.

Inside, one of the first sights are more than 30 trophies
and plaques for sports, and large brightly coloured models of
London landmarks. A bicycle wheel stuck with knobs like those
used on cupboard doors represents the millennium wheel in
Westminster.

The plaque commemorating a cheerleading prize says “Be the
best you can be.”

Keri Edge, who has been head teacher for 12 years, says just
over half of the 450 or so pupils are eligible for free school
meals – a measure of poverty.

Problems they contend with are broken homes, overcrowding, a
lack of routine, broken sleep patterns, poor diet, and a lack of
human contact because relatives spend too much time on smart
phones or tech toys.

Edge finds it charming that Dickens knew about her school.
But she wants to emphasise how modern children can be deprived
whether or not they are poor, particularly if they are left
“with just a Wii for company”.

The classrooms hum with calm activity. In the nursery, a boy
and a girl measure minutes with sand timers. In the corridors,
the pupils move from class to class in silent crocodiles.
“Lovely manners,” the teachers say. The 10-year olds are working
on a story. One has written of “a melodious sombre composition
so sweet it would turn a devil into an angel.”

Around the corner, just outside the school fence, is a
burned-out car.

(Editing by Peter Rutherford)

The American inventor, who made the incandescent light bulb viable for the mass market, also built the world’s first electrical distribution system, in New York, using “direct current” electricity. DC’s disadvantage was that it couldn’t carry power beyond a few blocks. His Serbian-born rival Tesla, who at one stage worked with Edison, figured out how to send “alternating current” through transformers to enable it to step up the voltage for transmission over longer distances.

Edison was a fiercely competitive businessman. Besides staging electrocutions of animals to discredit Tesla’s competing system, he proposed AC be used to power the first execution by electric chair.

But his system was less scalable, and it was to prove one of the worst investments made by financier J. Pierpont Morgan. New York’s dominant banker installed it in his Madison Avenue home in the late 19th century, only to find it hard to control. It singed his carpets and tapestries.

So from the late 1800s, AC became the accepted form to carry electricity in mains systems. For most of the last century, the power that has reached the sockets in our homes and businesses is alternating current.

Now DC is making a comeback, becoming a promising money-spinner in renewable or high-security energy projects. From data centers to long-distance power lines and backup power supplies, direct current is proving useful in thousands of projects worldwide.

“Everyone says it’s going to take at least 50 years,” says Peter Asmus, a senior analyst at Boulder, Colorado-based Pike Research, a market research and consulting firm in global clean technology. But “the role of DC will increase, and AC will decrease.”

FROM CLOUD TO MICROGRID

The main factor driving demand is the need to conserve energy and produce more of it from renewable sources. Alternating current is generated by rotating engines, but renewable sources such as wind and solar produce DC power. To use it, because of the way our buildings are wired, we first convert it to AC.

Another thing that’s happened since Edison’s time is the advent of the semiconductor. Semiconductors need DC power, and are increasingly found in household appliances. These have to convert the AC supply back to DC, which is a waste of energy and generates heat. In the early years of industrialization this wasn’t an issue, but today it’s important, especially in the huge and fast-growing business of cloud computing.

The companies that handle our information traffic are racking their brains to boost efficiency and cut carbon emissions from their plants. Pike Research expects the green data center business to be worth $41 billion annually by 2015, up from $7.5 billion now. That will be just under a third of all spending on data centers.

Finnish information technology company Academica, for instance, has a data center in a granite cave beneath Helsinki’s Uspenski cathedral. It uses Baltic sea water to cool the plant and feeds surplus heat to the city’s homes. IBM has designed a solar array to power its Bangalore data center. Microsoft has filed a patent application for a wind-powered data center.

Direct current may be one way to increase efficiency and reduce emissions. Right now, outside a handful of universities, it’s not the first thing people are thinking of because there are more basic things to do, says Eric Woods, Research Director for Smart Industry at Pike. But for companies on the leading edge, “it’s sort of coming out of the research ghetto.”

Pike has not put a figure on how big the DC component of the green data center market will be. Swiss-Swedish engineering firm ABB, a big DC advocate, says about 35 percent of demand for green data centers will come from the United States, 30 percent from Europe, and the rest spread globally.

Every day, says ABB, we all send more than 300 billion emails and 250 million tweets globally. The centers to handle all this data are growing by 10 percent each year and already consume 80 million megawatt-hours of energy annually — almost 1.5 times the amount of electricity used by the whole of New York City. They’re also responsible for about 2 percent of global carbon emissions.

DC power could help. At low voltages it has long been used in data centers but will be “game-changing” at higher voltages, ABB says.

Beyond its potential in data centers, DC power’s ability to run on renewable energy sources makes it interesting for important plants that need to operate in “island mode” — independent of the grid — in case of a supply failure. Building systems with small, self-contained electricity distribution networks known as microgrids is of particular interest to governments and militaries who worry about terrorist attacks.

“In our view the market (for microgrids) is about to take off,” said Pike Research’s Asmus, who also sees demand for microgrids in countries that aren’t densely covered by AC grids, such as Australia and India, and in developing countries looking to replace costly and wasteful diesel generators.

SMART GRIDS

And it’s not just “island mode.” Thanks to power electronics – semiconductor switching devices – DC can now be transmitted at high voltage over very long distances, longer than AC. It can be easily used in cables, over ground or under the sea.

High voltage direct current (HVDC) systems are the backbone of plans for smart grids, or supergrids, which aim to channel energy from places where power sources such as sunlight and hydropower are abundant to countries where it is scarce.

Siemens, which vies with ABB for market leadership in HVDC transmission, says demand is increasing fast. “By 2020, I’m expecting to see new HVDC transmission lines with a total capacity of 250 gigawatts. That is a dramatic increase,” says Udo Niehage, CEO of the Power Transmission Division in Siemens’ Energy Sector. “In the last 40 years, we’ve only installed 100 gigawatts worth of HVDC transmission lines.”

Emerging markets have been the main drivers. ABB has installed a 2,000-km line in China that operates DC power; a 2,375-km HVDC project under construction in Brazil will be the world’s longest transmission line when it comes online in 2013.

But Europe is also important. HVDC is now used in a power connection between Britain and the Netherlands. The island of Majorca, whose tourists push up power demand every summer, was hooked up to the Spanish mainland in September. The HVDC system can transmit 30 to 40 percent more energy than with conventional overhead lines carrying alternating current.

Jochen Kreusel, the head of ABB’s Smart Grid program, says smart grid demand will put Europe at the forefront of HVDC growth over the next 10 years. “At the moment, based on the number of projects, I’m quite sure it’s the strongest market,” he said. Pike in November 2010 estimated HVDC investment would reach $12.1 billion by 2015.

The bulk of this DC know-how is currently with European companies, although Chinese firms are joining in. Besides ABB, Siemens and France’s Alstom are the main players.

NOT THERE YET

There are plenty of obstacles to all these developments. People in some places worry about the environmental damage from laying new grids, others point to a lack of standards and say DC still has technological limitations that need to be fixed.

Public fears about the potential danger of high voltage cables could also be an issue, especially in the United States where standard voltages are already much lower than in Europe. There are practical limitations, such as a shortage of cable-making capacity.

If the economic climate does not improve, cash may also be a constraint. Countries such as Spain and the Netherlands have already cut subsidies to renewable energy projects. ABB’s Kreusel says the economic crisis will have an impact on the market, but he still expects DC to become “an evolutionary add-on” to AC grids over the next 20 years.

How would Edison see all this? He might even have foreseen it. “I’d put my money on the sun and solar energy,” he reportedly told his associates Henry Ford and Harvey Firestone in the 1930s. “What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that.”

(Edited by Simon Robinson)