[Formendacil]

Why don't the Valar do anything? Are Manwë and Varda powerless?

I think the answer is, for the most part: yes.

Think about it; we are told that the Valar did not make war on Morgoth after his escape from Valinor (I believe this may also be from Morgoth's Ring), quite largely because to do so would rend the earth in much the same fashion as the tumults of the world when they imprisoned him the first time, and they feared for the survival of Men, who are not as hardy as the Elves.

Additionally, though, if we continue to compare the Earth to the Ring, then remember how Sauron's connection to the Ring was finally broken: by destruction--utter destruction in Mt. Doom.

If the Valar destroy "Morgoth's Ring", we are left with... nothing. Arda will be no more--or no more inhabitable by Men, anyway (and probably not by anything else, either).

Of course, the day will come when the Valar must take the battle to Morgoth. Tolkien's writings are lightly scattered with references to "Dagor Dagorath", the battle at the end of times, when Melkor will at last be slain, but also when the Earth shall end. Shall "Morgoth's Ring" be destroyed--the final end of Arda Marred?