The government can own 99.999% of all the nodes, but because no real commerce will be done with those nodes it does not matter.
Short summary: An attacker could run tens of thousands of Bitcoin clients to isolate certain nodes from the network and then double-spend his coins.
That's actually a very hard attack to successfully pull off; I file it under "theoretically worrisome, but practically not a high priority."
It is hard because: [...]