Is Russia or more importantly Putin going nuts?

As the temperature on the international thermometer gets higher and higher one has to would what is going on in Russia or more importantly in the distorted mind of president Putin. Paranoia is defined by imagining that you are being persecuted by things out there. There is a definition of schizophrenia that has a number of significant symptom one being 'delusions' he claims there are no Russian troops on the ground in the eastern Ukraine, but that is patently untrue as they have been witnessed and there is film footage to the contrary, but decapitate this he claims there are still not there. Alice in Wonderland or what? There is increasing anxiety in the Baltic states on the edge of the Russian bear. There right to be concerned as their neighbour has become of late somewhat 'reckless and very unpredictable'.
What next for this international crisis the most significant since the end of the 'cold war'? The Nato meeting in Wales this week will hopefully develop a census about this parlous situation. What can we expect? Not reacting to this, is a reaction and will be correctly interrupted as 'weakness' by Putin. Its necessary in my opinion to move troops and armory into strategic geographic positions. He will then see that there are limits to his actions. He believes that no troops from Nato will enter the conflict, but what must be said explicitly is that - if he continues this reckless behavour there will be clear reactions that will ratchet up the potential conflict. His actions are not neutral, but have perhaps 'unintended consequences'. What must be made clear to him is that there are definite limits to his actions and actions by Nato will follow.