WHILE AMERICA WAS SLEEPING I fixed a 'news breakfast' for you -- ready each weekday morning at 6am Eastern to satisfy your media craving [feature permalink here]. These must-reads will help you kick start the day:

TODAY'S BIG NEWS --  North Korea Shells South Korean Island, South Korea Fires Back: "North Korea on Tuesday fired dozens of artillery shells at a South Korean island, setting buildings on fire and prompting a return of fire by the South, Seoul's military and media reports said. . . . The exchange, which lasted for about an hour and then stopped abruptly, was the most serious between the two Koreas in years. South Korea's military said one marine had been killed and three seriously wounded in the shelling, the biggest attack in years. The island is about 3 km (1.8 miles) south of the sea border and 120 km (75 miles) west of Seoul." (Reuters)

One Dead: "South Korea's YTN television said one marine was killed and two other people were injured, several houses were on fire and shells were still falling on Yeonpyeong island. The station broadcast pictures of thick columns of black smoke rising from the island." (CBS)

Four Seriously Wounded (Yonhap)

Second Marine Dies (Yonhap)

'Provocation': "South Korean President Lee Myung-bak on Friday called the torpedo attack on one of its warships a "military provocation" by the Democratic People's Republic of Korea (DPRK) and a violation of the armistice agreement between the two sides." (Xinhua)

NKorea Says SKorea Fired First: "The South Korean enemy, despite our repeated warnings, committed reckless military provocations of firing artillery shells into our maritime territory near Yeonpyeong island beginning 1pm (1500 AEDT) . . . [We] will continue to make merciless military attacks with no hesitation if the South Korean enemy dares to invade our sea territory by 0.001 mm." (AFP)

South Korea Warns: "South Korea has condemned a deadly attack by the North on one of its islands and warned it would retaliate strongly if there was more violence." (Sky News)

White House Reacts: .'The United States strongly condemns this attack and calls on North Korea to halt its belligerent action and to fully abide by the terms of the Armistice Agreement,' spokesperson Robert Gibbs said today." (RFI)

South Korean TV Live Streaming:



European Stocks Dropping (Bloomberg)

Currencies Rising: "The dollar and the Swiss franc strengthened after North and South Korea exchanged artillery fire, boosting demand for the currencies as a refuge." (Bloomberg)

U.S.

White House -- Terrorists Have Discussed Use of Prosthetics to Conceal Explosives: "The revelation about the intelligence, which is not new but relevant to debate over new security measures at airports, comes as the White House today acknowledged that the implementation of the security procedures has not gone perfectly.  Americans by a 2-to-1 margin support the use of naked image full-body x-ray scanners in airport security lines, but fewer than half back aggressive new pat-down procedures, according to a new ABC News/Washington Post poll. Opposition to both rises among those who fly with any frequency." (ABC)

She Says She Could Beat Obama. Or Could She? "Voters don't think President Obama deserves a second turn – but they don't want Sarah Palin either, according to a new Quinnipiac University survey. Obama leads the former vice presidential candidate by 8 percentage points in the survey, but is in a statistical dead heat with Mitt Romney and Mike Huckabee." (NY Daily News)

Plouffe to White House: "President Obama is planning to bring former campaign manager David Plouffe onto the White House staff at the beginning of January to work alongside senior adviser David Axelrod for a brief time before Axelrod moves on to help run the re-election campaign, according to a senior administration official and a senior Democratic strategist familiar with the plan." (CNN)

Business Wary: "After business leaders sunk millions into the midterms to defeat Democrats, a chastened Obama administration is seeking reconciliation with the corporate community.
But after two years of building frustration, the executives say they won’t be won over by another round of private lunches and photo opportunities at the White House.  If President Barack Obama has any hope for a truce with Corporate America in time for his 2012 reelection campaign, he needs to drop the name-calling, try to see their point of view better and step up with some specific proposals." (Politico)

Left’s Pressure Moves Pelosi Toward Clashes With Obama: " As Obama decides whether and how much to compromise with the new Republican majority in the House, Pelosi is facing pressure from empowered liberals in her caucus to take a harder line with the administration." (The Hill)

G.O.P. Scores Another: "Democratic Rep. Solomon Ortiz has conceded to Republican Blake Farenthold, handing the GOP an upset victory in the race for the South Texas seat. With local election officials completing their manual recount of votes cast in the Corpus Christi-area 27th District race, Ortiz trailed Farenthold by nearly 800 votes." (Politico)

No Midterm Mandate? "A majority of Americans want the Congress to keep the new health care law or actually expand it, despite Republican claims that they have a mandate from the people to kill it, according to a new McClatchy-Marist poll." (McClatchy)

Jeb Won't Run: "Jeb Bush would make a good president, but the former Florida governor has no intention of running for the Oval Office in 2012, according to his father, former President George H.W. Bush." (CNN)

Could Democrats give Obama trouble in 2012? "Most Democrats oppose the war in Afghanistan. Amid talk of a longer US presence there, Obama runs the risk of alienating his base. A damaging primary challenge from the left is not unthinkable." (Christian Science Monitor)

Woman 'Exhausted' From Defending Obama Loses Job: The woman who told President Barack Obama that she was "exhausted" from defending him and his economic policies and waiting for the change she expected after voting for him has another reason to be put out: She's lost her job. Velma Hart, the chief financial officer for Am Vets, a veteran services organization based in Maryland, said Monday in an interview with CNBC that she was laid off as part of the nonprofit's effort to cut expenses." (AP)

Admin Loses Two More: "Diana Farrell, deputy director of President Barack Obama’s National Economic Council, and Assistant Treasury Secretary Michael Barr are leaving the administration, adding to the turnover in the ranks of the White House economic team that worked on the government’s response to the worst financial crisis in more than 70 years." (Bloomberg)

BBB to Investigate Its Own L.A. Chapter: " The Better Business Bureau says it will "launch an immediate investigation" into its biggest local chapter, the Los Angeles-area BBB, after an ABC News report revealed that the chapter sold memberships to non-existent businesses that immediately received A grades." (ABC)

Money

The Just-In-Time Consumer: "After 20 years of stocking up, more shoppers now buy goods just when they need them, forcing companies to overhaul the way they produce and distribute." (WSJ)

J. Crew Nears Sale Deal: "J. Crew, the clothier of choice for the likes of Michelle Obama, is near a deal to sell itself for about $2.8 billion to the buyout firms TPG Capital and Leonard Green & Partners, people with direct knowledge of the matter told DealBook on Monday." (NY Times)

Ireland Political Crisis Complicates Rescue Deal: "One day after requesting a bailout worth more than $100 billion, financially troubled Ireland plunged deeper into a political crisis that could complicate a rescue deal with the International Monetary Fund and European Union. At the same time, concern mounted that attempts to prevent a broader regional debt crisis by shoring up near-bankrupt Ireland may not be enough to prevent the need for more bailouts in ailing Portugal, and perhaps even for the far larger economy of troubled Spain." (WaPo)

World

Iranian Parliament Wants Ahmadinejad Impeached: "Iran's parliament revealed it planned to impeach President Mahmoud Ahmadinejad but refrained under orders from Supreme Leader Ayatollah Ali Khamenei, exposing a deepening division within the regime. Lawmakers also launched a new petition to bring a debate on the president's impeachment, conservative newspapers reported Monday. . . . They accused him and his government of 14 counts of violating the law, often by acting without the approval of the legislature. Charges include illegally importing gasoline and oil, failing to provide budgetary transparency and withdrawing millions of dollars from Iran's foreign reserve fund without getting parliament's approval." (WSJ)

Taliban Leader in Secret Peace Talks Was an Impostor: "'It’s not him,' said a Western diplomat in Kabul intimately involved in the discussions. 'And we gave him a lot of money.' American officials confirmed Monday that they had given up hope that the Afghan was Mr. Mansour, or even a member of the Taliban leadership. NATO and Afghan officials said they held three meetings with the man, who traveled from in Pakistan, where Taliban leaders have taken refuge. The fake Taliban leader even met with President Hamid Karzai, having been flown to Kabul on a NATO aircraft and ushered into the presidential palace, officials said." (NY Times)

No Harm Done: "Iran's nuclear chief says a malicious computer worm known as Stuxnet has not harmed the country's atomic program. . . . Salehi's remarks on Tuesday came a day after diplomats told The Associated Press in Vienna that Iran's nuclear program has suffered a recent setback, with major technical problems forcing the temporary shutdown of thousands of centrifuges enriching uranium." (AP)

More On the Iranian Nuke Setbacks @ WaPo.

Hundreds Die in Cambodia Stampede: "At least 410 people have been killed in a stampede at a water festival on a small island in the Cambodian capital. The crush occurred on the island of Koh Pich following a traditional boat race along the Tonle Sap river on Monday evening." (Al Jazeera)