Were the Valar “demoted” at the end of the Second Age?

[CAB]

Then Manwe upon the Mountain called upon Iluvatar, and for that time the Valar laid down their government of Arda. -Akallabeth, The Silmarillion

I have often wondered what exactly was meant by this passage concerning the changing of the world at the end of the Second Age. Recently I have developed a theory. Maybe it means that the Valar were “demoted” by Eru.

If the Valar’s task was to guide and protect the Children of Iluvatar, they did a pretty lousy job. The story of Elves and Men is filled with hatred, war, and suffering, much of which can be attributed directly to the Valar and much of which (no, not all) they could have prevented.
The Valar had made mistakes on top of mistakes. They were perhaps too interested in their own happiness and definitely didn’t understand Elves and Men.

When they realized that the Numenoreans were going to attack them (due to the influence of one of their own people, no less) they should have appreciated the magnitude of the situation. They could have sent an ambassador such as Eonwe to speak with the Numenoreans and perhaps counteract Sauron. Or (heaven forbid) one of the Valar could have left to comfort of Valinor and gone themselves. What did the Valar see fit to send? Threatening weather and cloud formations, nice choice.

The Valar’s decision to fence themselves (and apparently many of the most beautiful things in the world) in the West and then ban the Numenoreans from visiting and then failing to take proper action when troubles arose, caused Eru to have to destroy thousands of his Children. Maybe this was the final straw. He then removed the temptation of Valinor from the Earth and let the Valar live their own lives without so much responsibility for the state of Middle Earth. A responsibility they had never really lived up to anyway.