installed fglrx and the problem went away.
Attached Xorg.0.log so you can see the diff.


** Attachment added: "Xorg.0.log"
   http://launchpadlibrarian.net/48515077/Xorg.0.log

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Graphics messed up, most likely by fast screen updates.
https://bugs.launchpad.net/bugs/577461
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which is subscribed to xorg-server in ubuntu.

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