Putin is a brinksman. He loves to puff his chest out. His posturing is just as much for the Russian people as it is for the West.
It is a precarious situation in Ukraine but the economic impact and subsequent internal unrest that full blown Russian involvement in Ukraine would threaten is a massive hold on Putin. Don't underestimate how used the Russians have got to Western goods, a consumer driven society and financial growth. Sure, the wealth is not distributed anywhere near equally, corruption and crony-ism is widespread in politics but few want to go back to queuing for bread.