As of this writing the Russian stock market is up more than 4 percent today after a 3.7 percent bump up yesterday. At this rate the annexation of Crimea is going to spark a major rally for Russian stocks.

Wonder what the Communist leadership in Beijing is thinking now as they contemplate the possibility of making an armed grab for the Senkakus or some other piece of coveted real estate? Perhaps they’re thinking that the consequences of such a move would not be all that deleterious–a few days of bluster from the U.S. followed by sanctions on fewer than a dozen individuals. Why not go for it?

It is imperative that President Obama not stop with the extremely mild sanctions announced Monday. He needs to go after the assets of major Kremlin powerbrokers and their oligarch allies–and he needs to send a shot across Putin’s bow by barring at least one Russian bank from conducting cross-border transactions, as suggested by Mark Dubowitz. That is the way to really hurt Putin–to go after his assets and those or his cronies and to prevent the financial institutions they operate from functioning as per normal. Obama should also be providing military aid to Ukraine, to make clear that further Russian aggression will meet a determined response.

That, however, runs the risk of Russian retaliation which the U.S. and EU so far have not been willing to run. So the Russian stock market continues to waft ever upward and Putin is no doubt congratulating himself for his successful bout of Realpolitik. Having transgressed all international norms, Putin has prudently signaled that he is not preparing to go any further at this time, that he will leave eastern Ukraine alone for the time being, causing Russia’s neighbors to breathe a palpable but premature sigh of relief.

Once again the tsar in the Kremlin appears to be running rings around the leaders of the West, who appear to be weak and confused by comparison. If he can do it twice (in Georgia and Ukraine) he can do it a third time and a fourth. That is a terrible precedent to be setting, and one that the entire world will be taking note of.