Welcome to Overnight News Digest, where the regular crew informs and entertains you with tonight's top stories from the nation and the world.
Tonight's top story comes from Reuters.
Lawmakers optimistic about deal on tax cuts
By Donna Smith
WASHINGTON | Sun Dec 5, 2010 5:02pm EST
Senior lawmakers said on Sunday they were optimistic about striking a deal to extend Bush-era tax cuts for all taxpayers and continue emergency jobless aid for millions of long-term unemployed Americans.
President Barack Obama and other Democratic leaders want to extend the cuts only for low- and middle-income Americans, arguing that the tax breaks for the wealthy would add $700 billion to budget deficits over the next 10 years.
Republicans, who made big gains in the November 2 congressional elections, want rates unchanged for all taxpayers. They say the uncertainty over taxes discourages investment and hurts job growth as the economy recovers from the worst recession since the Great Depression.
More news after the jump.
World News
Reuters: Calibrating China's cool-down
By Emily Kaiser
WASHINGTON | Sun Dec 5, 2010 3:02pm EST
China needs to slow down its economy enough to cool inflation at home without putting a drag on growth in the rest of the world.
This will require careful calibration. It's no secret that advanced economies are growing slowly. The International Monetary Fund thinks 2011 output will reach just 2.2 percent in rich countries while China romps ahead at 9.6 percent.
Figures this week are expected to show China's import growth outpaced that of exports in November, although the total volume of goods flowing out still easily dwarfs those coming in.
Reuters: Japan defense plan wary of China's military: report
by Chisa Fujioka
Japan will identify North Korea as a threat and call China's military activities a concern in a review of its defense policy that will include plans to beef up its ability to cope with Beijing's rise, a newspaper reported on Monday.
The update of the National Defense Program Guideline, the first since 2004, is expected this month as Japan confronts China's military build-up and North Korea's deadly shelling of a South Korean island.
The guideline will outline a new stance called "dynamic defense capability" which will call for deterring China around Japan's southern islands, while also responding to terror and guerrilla attacks, the Nikkei business daily reported.
Reuters: South Korea starts live-fire drills off west coast
By Jonathan Thatcher and Jeremy Laurence
SEOUL | Mon Dec 6, 2010 1:05am EST
South Korea started nationwide live-fire naval exercise on Monday, despite Pyongyang's warnings against conducting provocative drills in disputed waters off the west coast of the divided peninsula.
South Korea's military said the exercises were scheduled to take place in seas near the disputed Northern Limit Line (NLL) off the west coast, but not near Yeonpyeong island which was hit by a barrage of North Korean shells 13 days ago.
Pyongyang said the exercise, expected to last around a week, showed the South was "hell-bent" on setting off a war.
Reuters: Russian spy uncovered in British parliament
By Stefano Ambrogi
LONDON | Sun Dec 5, 2010 8:39am EST
A young Russian woman working for a British lawmaker is facing deportation after security services detained her on suspicion of espionage, the Sunday Times reported on Sunday.
The paper reported that Katia Zatuliveter, 25, secretly worked for the Russian intelligence as a "sleeper" agent.
She had been working for Liberal Democrat MP Mike Hancock who sits on parliament's defense select committee which examines defense policy but has no access to secret material.
U.S News
Reuters: Bernanke: More Fed bond buys "certainly possible"
By Pedro Nicolaci da Costa
WASHINGTON | Sun Dec 5, 2010 9:30pm EST
The Federal Reserve could end up buying more than the $600 billion in government bonds it has committed to purchase if the economy fails to respond or unemployment stays too high, Fed Chairman Ben Bernanke said.
In a rare televised interview, Bernanke told the CBS program "60 Minutes" the Fed's actions are aimed at supporting what is still a fragile economic recovery, dismissing critics who argue the policy will lead to future inflation.
"This fear of inflation I think is way overstated," Bernanke said in the interview aired on Sunday.
Business
Reuters: Stocks may fly as fear fades
By Angela Moon
NEW YORK | Sun Dec 5, 2010 11:40am EST
Europe's sovereign debt crisis will still hang over global markets this week, but on Wall Street, investors will not be afraid to bet on stocks.
Wall Street showed its ability to hold onto gains, or quickly recover from losses last week despite Europe's debt woes, suggesting that investors are confident of a sustained rally.
"When things don't fall apart on bad news, you know that the market is no longer vulnerable. The overall sentiment is pretty solid," said Randy Frederick, director of trading and derivatives at Schwab Center for Financial Research in Austin, Texas.
Reuters: Exclusive: AOL mulls breakup, then merger with Yahoo
By Nadia Damouni
NEW YORK | Mon Dec 6, 2010 1:08am EST
AOL Inc, undergoing a radical transformation into the king of content on the Internet, is actively exploring a breakup involving a complicated series of transactions that may lead to a merger with Yahoo Inc, sources close to the plans told Reuters.
The plans are still in the exploratory stage and Yahoo has not been contacted, the sources said. The plans are also fraught with complications involving myriad moving pieces.
In many respects, the latest discussions are derivative of plans contemplated in 2008 and 2009 before Time Warner spun off AOL to Time Warner shareholders.
On the Lighter Side
Reuters: Graeme McDowell denies Tiger victory in Sherwood playoff
by Simon Evans
THOUSAND OAKS, California | Sun Dec 5, 2010 7:34pm EST
Tiger Woods's miserable year ended with more disappointment as he gave up a four-stroke lead and suffered a crushing playoff loss to Graeme McDowell in the Chevron World Challenge on Sunday.
It marked the first time that Woods, without a win since the 2009 Australian Open, lost a tournament in which he led by at least three strokes going into the final round at Sherwood Country Club.
Under pressure from U.S. Open champion McDowell, Woods let his grip on the lead slip in his own event with a double bogey on the 13th that the Northern Irishman birdied for a two-stroke lead.