> markets have all the information

Markets do have all the available information. But no person or group of people can ever process all the information in a meaningful way. Only the market itself can process the huge amount information dispersed among participants.

The rest of your post is silly "animal spirits" pseudo-keynesianism. No, the government cannot usefully manipulate the business cycle or limit damage from failing businesses. Even Keynes himself only ever really tried to say government could stop a major slide from happening in the first place. He said it would be too late to intervene post-crash.