Is this what government was created for? To encourage people to shop more?
No. I have no doubt that, in the long term, the credit crisis will be a good thing for society - or it would be if the governments of the world could just accept it rather than try to prop up the status quo with free money for banks and automobile companies so that they can keep doing what they have been doing, and what we now are coming to realize was probably the wrong thing.
In the USA, Obama seems to have realized that while Keynsian infrastructure spending may be necessary to avert a "car crash" in the economy, this money must be spent in ways that will transform US cities from auto-culture to networks of walkable communities. This is a none to easy task given the cumulative effect of about 80 years of money and effort already spent on developing auto-culture and the sprawl, pollution and waste that goes along with it. This article from Reuters highlights the fact that the fight is still far from won.
U.S. President-elect Barack Obama is striving to revolutionize infrastructure through a proposed stimulus that may reach $1 trillion. States, however, seem to have other plans. Missouri, Utah and other states are planning to use the federal funds on highways rather than the environmentally friendly mass transit and rail lines that Obama envisions. Bloomberg (24 Dec.)
National governments now understand what needs to be done. Local governments mostly understand what needs to be done. This fight needs now to be taken to State governments as it appears this is perhaps the last stronghold of those dreaming of a return to the failed pork-barrel auto-dream of last century.