Farley points us to the sinking of a Korean ship near the boundary waters between North and South Korea. 104 sailors were on board. The majority have definitely survived and it's unclear how many sailors died.
No one quite knows what happened yet, but given the long-time history between the two nations, it certainly seems likely that the North attacked the South.
If the sinking of Cheonan was intentional, it creates a serious crisis for the Koreas' neighbours and for the United States. None of the US, Japan, or China desire the threat of major military action on the Korean Peninsula. The US, still embroiled in Iraq and Afghanistan, doesn't want another military confrontation on its plate. At the same time, it will be difficult for the US to restrain South Korea from some form of retaliation. Japan's patience with North Korea has similarly run thin, and it is unlikely that Tokyo could be relied on too heavily as a voice of caution. Beijing has only limited affection for its North Korean client, but certainly does not want war, or even the threat of war. North Korea's intentions remain mysterious; if it intended to signal its toughness and resolve to South Korea, it may have bitten off more than it can chew.That's all true, but I honestly think the only thing South Korea can do is nothing. That's the best policy by far. Obviously, there has to be a point where the South strikes back. But assuming this is an isolated incident, the South's best policy is to talk tough but not do too much.
There are two major reasons for this. First, many South Koreans, particularly in the younger generation, don't see the North as a real threat. They want a truce with the North, or at least to forget it exists. Of course, actions like sinking a ship can change that. But the South very much does not want a flood of North Korean refugees. It might be best for everyone if the US, China, Russia, and Japan all decided to launch air strikes to destroy the North's nuclear weapon program, its major industry, and maybe even the government. But that would lead a massive movement of refugees. While in theory many South Koreans want reunification, they are also quite aware of what happened to West Germany after unification. The east dragged the economy for years, and still does today to no small extent. Knowing their economy has more vulnerabilities than Germany, Koreans worry what the collapse of the North will mean for their lives.
Of course, someday the North will collapse, so maybe it's better it happened sooner.
The other problem with striking back is the unpredictable nature of the North Korean government. They have nuclear weapons and they might well use them. After all, North Korea seems to operate under different presumptions than all the other nuclear powers, even Pakistan and India. Any strike might mean the North launches whatever weapons it has toward the South or even Japan, a massive, though no doubt futile invasion of the South, and high casualties. Taking direct action against the North has a whole lot of negative possibilities and not too many positive outcomes.
Obviously, if the North decides to make this just the first of a series of attacks, that's a different story. But right now, the best policy and the most likely policy is to hold steady.