Last year, noted President Obama in his recent State of the Union address, his critics were saying that Russian President Vladimir Putin's aggressive moves into neighboring Ukraine were "a masterful display of strategy and strength."
But now, he added, after Western countries levelled stiff economic sanctions against Moscow, "Russia is isolated, with its economy in tatters."
He's right about the economic impact of sanctions -- helped along by plunging oil prices. Days after Obama spoke, bond-rating agency Standard and Poor's downgraded Russia's credit rank to "junk" status. The ruble has lost half of its value against the dollar, and investors pulled $152 billion out of the country last year.
The problem is that Putin seems undeterred by these economic penalties. A rocket attack on the Ukrainian city of Mariupol -- clearly launched by Russian-backed rebels -- recently killed 30 and wounded more than 100.
The Washington Post said the attack, part of a larger rebel plan to capture Mariupol and surrounding territory, revealed Obama's speech as "wishful thinking." The reality is that "the Russian ruler has been neither deterred by the impending economic crash caused by Western sanctions and declining oil prices nor attracted by the prospect of reconciliation with the West."
It's hard to argue with that conclusion, so Putin has left Western leaders with no choice. They have to impose a new round of even harsher economic measures against Moscow.
Putin is a bully, at times a dangerously deranged one, who fantasizes about restoring the Soviet Union to its former glory -- dominating smaller and weaker states from the Baltics to Central Asia. And like all bullies, he has to be challenged and confronted. Otherwise he'll never stop.
No one wants a shooting war with Russia, and this showdown should never come to that. On today's global economic battlefield, markets are as powerful as missiles. Money managers can have the same impact as military commanders. Capital flows can mean more than troop movements.
"The crucial question," as the Post put it, "is whether the West will now have the fortitude to respond to Mr. Putin with tangible measures of deterrence, rather than mere rhetoric."
The answer is not yet clear. The global marketplace cuts both ways. Western countries like Germany and France are made cautious by their deep economic ties to Russia --importing energy, exporting machinery.
In fact, Berlin and Paris seem far more willing to play tough with a fellow member of the European Union -- Greece -- than with Russia. But then Russia has oil, and Greece doesn't (olive oil doesn't count).
Obama was right to say in his speech that America leads best when it displays "persistent, steady resolve," not "bluster." That resolve is exactly what's needed now.
Russia is on the ropes economically. As Neil Shearing, an economist at Capital Economics in London, told the Associated Press, Russia has suffered a "dramatic deterioration in (its) economic outlook over the past six months."
In explaining its decision to downgrade Russia's credit status, S&P mentioned that the country has dramatically raised interest rates in order to stabilize the ruble, so it has few levers left to influence the economy. "In our view, the Russian Federation's monetary policy flexibility has weakened, as have economic growth prospects," wrote the agency.
Two other credit companies, Moody's and Fitch, seem poised to join S&P in downgrading the value of Russian bonds. If that happens, the outflow of capital could accelerate quickly.
Tim Ash, a market analyst at Standard Bank, told the Wall Street Journal that he expects Fitch and Moody's to follow S&P's vote of no confidence. Russia's problems reflect a toxic combination of "lower oil prices, sanctions and the conflict in Ukraine, with the difficult geopolitical tussle with the West, which shows no sign of easing. These factors have and are expected to continue to weigh on Russia's balance sheet."
A lot of weapons can be brought to bear in that "tussle." The fragile Ukrainian government in Kiev needs economic aid. There's a bipartisan move on Capitol Hill to provide that government with defensive arms that could deter the advance of Putin's client forces in Eastern Ukraine.
But sanctions are the heaviest weapons around, because they could trigger a secondary reaction among investors who want no part of a collapsing economy.
The famous money manager Warren Buffett has long been fond of praising the benign influence of "Mr. Market." Well, maybe it's time to start calling his hero "Gen. Market." After all, he's the chief commander in the conflict with Putin and his Puppets.