Putin has intentionally worked for years to create a situation that puts everyone in a poor situation. He's worked to break up the power of the EU by getting the UK to leave, he's worked to destabilize the democratic and unity of the US and get people to distrust everything our government does and to heighten the arguments between sides. In addition he's gotten half of Europe addicted to cheap Russian oil which will affect the entire world supply should it be cut off. And then he created a war where the only response was to back down completely and let him get his way OR to experience massive unrest in your own countries as the OP mentioned.
So we as Americans have to decide, do we love our cheap oil more than we care for true Democratic principles? If so, we push for a lot of loud words and nothing else... Or we become willing to do away with it and push forward with what could actually create a massive war.
Now I'm not security specialist. I think if NATO truly pushed back with all of its military might that he'd find some way to back down. Like any bully, they don't handle being punched in the face. He's also struggling for support in his own country and this was is one way for him to grow that support (Especially if the west pushes back hard).
Thankfully I'm not in the position to decide how we respond. There is no good response. And there's only one person to blame, and that is Putin and those who have propped him up for years.