By DALE KASLER, Sacramento Bee

Weeks after wrapping up a deal to close a $26 billion budget deficit, Gov. Arnold Schwarzenegger is taking aim at what he calls California's next great fiscal problem: the state's battered pension system.

Federal officials have uncovered a $40 million Ponzi scheme in California that boasted glowing investment returns even as the financial markets were sinking.
The scheme lured about 150 customers, mostly from the Sacramento area, over a four-year period by advertising low-risk investments paying 42 percent a year, the U.S. Securities and Exchange Commission said.

The million-dollar home became something of a rare bird in California last year, a victim of the continuing collapse in the housing market.
California saw a 42.5 percent drop in home sales at $1 million or above last year, according to a report this week by market researcher MDA DataQuick.

Google Inc. is ending its advertising experiment with hundreds newspapers, short-circuiting a program that could have funneled more dollars to the troubled newspaper industry.
The program called for Google's advertisers to buy space in the print version of newspapers through a kind of auction. The online giant announced Tuesday it would stop booking ads for print Feb. 28.

California's mortgage-workout program had its busiest month in September since the voluntary program began last November, the state said this week.A total of 27,829 troubled mortgages were resolved in one form or another through the program brokered by Gov. Arnold Schwarzenegger, according to the Department of Corporations.That beat the previous high of 26,358 in July.

If the turmoil on Wall Street winds up crippling the economy, as many experts fear, the impact won't just be felt in headline-grabbing bank failures or dramatic swings in the Dow.It could be felt in quieter, less sensational fashion, too.

A California toddler's death prompted the voluntary nationwide recall last week of two makes of youth beds.The U.S. Consumer Product Safety Commission has announced the recall of the La Jolla Boat Bed and Pirates of the Caribbean Twin Trundle Beds, both by Bayside Furnishings of San Diego.

Gasoline prices continue to set records across the nation, but the daily increases are getting smaller and there are signs that prices could be nearing a peak.After peaking at $135.09 last Thursday, crude retreated. California prices were up minimally early this week, and reports of significant declines in consumption sent crude oil prices down $3.34 a barrel, to $128.85.

California gasoline prices are up again after stabilizing earlier in the month -- and the $4 gallon is well within view.California's statewide average gas price has risen to $3.94 a gallon, a 22-cent increase in the past month, AAA of Northern California said this week.

SACRAMENTO, Calif. -- A desperate slashing of interest rates may ease some of the nation's economic jitters but may not be enough to stave off recession. It also probably won't provide an immediate fix for a deepening foreclosure crisis that has moved into uncharted territory in California.