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An umbilical granuloma is a small piece of bright red, moist flesh that remains in the umbilicus after cord separation when normal healing should have occurred. It is a small piece of scar tissue, usually on a stalk, that did not become normally covered with skin cells. It contains no nerves and has no feeling. Depending upon when they are more flat or berry-like, these things are either cauterised with silver nitrate, tied off with a suture and allowed to wither and drop off, or just plucked off with a clamp and cauterised.
That ought to fix it. Very, very rarely (3 in a million babies) the cord continues to ooze a clear fluid despite the apparent healing of the cord stump. This condition represents a persistent connection of the bladder with the umbilicus called a patent urachus. The fluid that leaks is actually urine. The treatment is of course surgical closure of the connection.
Another potential cause of persistent discharge from the umbilicus in young infants is a persistent yolk stalk (also known as omphalomesenteric duct, umbilical duct, or vitelline duct). It can leak intestinal contents because it is a direct connection from the small bowel to the umbilicus. Again, treatment is surgical.
Pus oozing from the umbilical stump would imply infection, especially if there were redness of the skin around the umbilicus. Call your doctor for instructions in that case.