NORTH KOREA UPDATE: First, exactly what did North Korea say in their negotiations with the U.S. and China? From today's Washington Post:

North Korean negotiators have told U.S. officials in Beijing that the communist nation possesses nuclear weapons and threatened to export them or conduct a "physical demonstration," U.S. officials said yesterday....

U.S. officials said North Korea declared it had nuclear weapons as officials were milling about in corridors on Wednesday, the first day of the talks among the United States, North Korea and China. The top North Korean official at the talks, Li Gun, pulled aside the highest-ranking American present, Assistant Secretary of State James A. Kelly, and told him that North Korea has nuclear weapons. "We can't dismantle them," Li told Kelly. "It's up to you whether we do a physical demonstration or transfer them."

U.S. officials are still puzzling over the statement and its exact meaning, including whether North Korea was threatening to test a nuclear weapon. But, a senior official said, "it was very fast, very categorical and obviously very scripted."

OK, it's safe to say this is not good news. However, the really weird aspect of this has been that, in the wake of North Korea's admission, China is more upset than South Korea. From the Financial Times: China is supposed to be North Korea's closest ally. But the failure of US-North Korean talks brokered by Beijing this week has severely tried the patience of the Chinese government, diplomats and people close to the talks said on Friday.....

"The talks failed to achieve the results that China wanted. After putting so much effort into this the Chinese are pretty frustrated with the Koreans," said one foreign diplomat. Another person close to the talks said that, behind a smiling public façade, Chinese diplomats were seething at North Korea's behaviour.....

[W]hat is becoming increasingly clear is that, behind the rhetoric, Beijing's regard for the regime of Kim Jong-il (pictured), the North Korean dictator, has virtually evaporated. Any residual affinity from the days of socialist brotherhood more than a decade ago has gone.

"Korea is a huge problem," said one government official.

On the other hand, there's South Korea's reaction:

Government officials and experts in Seoul yesterday responded cautiously to some media reports on North Korea's admission of possessing nuclear weapons, saying they need more time to clarify the situation.

Developing....

UPDATE: Kevin Drum has more on the disturbing South Korean reaction.