Then we have nuclear war. Or we let Putin dictate international politics for however long he has left, and tell China/North Korea/every other bad actor that gets nukes for the rest of time that the game is "be serious about launching nukes offensively and you'll get whatever you want". How do you think that'll work long term?
It's that, or Putin at least maintains a shred of rationality. Or his inner circle takes him out before he pushes the button.
For those that still insist that Putin is rational, there's one way to model his current behaviour: his utility function prioritises "make Russia great again", or at the very least, geopolitical concerns. He's willing to take whatever hit he needs to take, whether economically or in the lives of soldiers and civilians, to achieve this goal.
The only way he'd entertain it is if he's truly lost his marbles, and if that's the case then this timeline just got a whole lot shittier regardless of whether we capitulate to the madman with the nukes or not. I sincerely doubt western institutions are going to show their bellies because of Putin's nuclear threats, so we'll see if he's bluffing one way or another.