Macroeconomics: UK economy, IB Economics

It was Einstein who said that "the definition of insanity is doing the same thing over and over again and expecting different results" - and so it proves, with a GMB report suggesting that, much like the collapse of Carillion, the government was still giving public contracts to Interserve despite its profit warnings and exceptionally high debt levels. 

Could it have been the case that the government was helping to sustain yet another business that was being run like a giant Ponzi scheme? Even more remarkably, there are suggestions that plans were being drawn up to nationalise the company in the event of its liquidation - something that would appear to be a reasonable short-term salve but that, ideologically, at least, would appear to admit that the current outsourcing model is dysfunctional. 

Would the new Carillion please stand up.

And here it is: it seems the Interserve is on the brink of going into administration. Is this another sign that the contracting out/competitive tendering model is on the way out. Or is it just proof that when overseen with 'light touch' regulation, these sort of businesses cannot be trusted to survive.

Of course, the well-paid executives who've led both Carillion and Interserve will exit stage left, without accepting any personal responsibility, and will be join by auditors - at a guess one of the big four, and probably PwC - to wash their hands of the whole sorry business.

It's rare for me to say it - but sometimes capitalism doesn't help itself... 

It appears that Interserve has been saved - but read the article carefully, especially Simon Jack's comment. 

16,000 small shareholders have been wiped out. And that's the rub.

Is this another Carillion? Or has the prospect of this been averted? And what does this say about the viability of outsourcing?

Lots to ponder.