He needs an off-ramp.
I'm no psychologist and I've obviously never met him, but I do not think he's crazy. The (super) amateur Russo-European history student in me believes that the average American mind doesn't adequately understand how the Russian people view Ukraine, and that if taken from a different POV, you can see the sense in his goal, if not the methods. I don't think his are the actions of a mad man.
The world leaders (read: us) need to give him a way out that satisfies all parties enough and allows him to save face. It wouldn't come without a cost, but at this point things aren't going back to the way we were. I do not care to get into general politics at this time, but imo we have a role in all this, and largely by inaction, I think the US has handled this more than poorly.