Does anybody know ***why*** this decision was made in pinyin, about not writing any hint of the sound `/o/` in *liu*, instead of writing something like *liou* or *liow* ?  

The first reaction of any newcomer to Chinese, and also, non-Chinese speakers, is to say *lee-oo* instead of *lee-ow*.  

Edit: some arbitrary decision seems to have been made by choosing *you* instead of *yu*, but with other initials, the choice was: *liu*, *niu*, *jiu*, etc. when the phoneme `/ou/` in all cases is the same and one could reasonably expect them to be written the same, or at least to be a good reason as to why it isn't the case.  

Edit2:
Happens something similar to the final *-ui* which is pronounced *-uei*