diff --git a/ethchain/state.go b/ethchain/state.go
index 3d05ff582..7ddf7916f 100644
--- a/ethchain/state.go
+++ b/ethchain/state.go
@@ -93,10 +93,6 @@ func (self *State) ResetStateObject(stateObject *StateObject) {
 func (self *State) UpdateStateObject(stateObject *StateObject) {
 	addr := stateObject.Address()
 
-	if self.stateObjects[string(addr)] == nil {
-		self.stateObjects[string(addr)] = stateObject
-	}
-
 	ethutil.Config.Db.Put(ethcrypto.Sha3Bin(stateObject.Script()), stateObject.Script())
 
 	self.trie.Update(string(addr), string(stateObject.RlpEncode()))
@@ -131,7 +127,7 @@ func (self *State) GetOrNewStateObject(addr []byte) *StateObject {
 }
 
 func (self *State) NewStateObject(addr []byte) *StateObject {
-	//statelogger.Infof("(+) %x\n", addr)
+	statelogger.Infof("(+) %x\n", addr)
 
 	stateObject := NewStateObject(addr)
 	self.stateObjects[string(addr)] = stateObject
diff --git a/ethchain/state_manager.go b/ethchain/state_manager.go
index babfbd061..cec424583 100644
--- a/ethchain/state_manager.go
+++ b/ethchain/state_manager.go
@@ -6,6 +6,7 @@ import (
 	"fmt"
 	"github.com/ethereum/eth-go/ethcrypto"
 	"github.com/ethereum/eth-go/ethlog"
+	"github.com/ethereum/eth-go/ethtrie"
 	"github.com/ethereum/eth-go/ethutil"
 	"github.com/ethereum/eth-go/ethwire"
 	"math/big"
@@ -205,7 +206,15 @@ func (sm *StateManager) Process(block *Block, dontReact bool) (err error) {
 		return err
 	}
 
+	if ethutil.Config.Paranoia {
+		valid, _ := ethtrie.ParanoiaCheck(state.trie)
+		if !valid {
+			err = fmt.Errorf("PARANOIA: World state trie corruption")
+		}
+	}
+
 	if !block.State().Cmp(state) {
+
 		err = fmt.Errorf("Invalid merkle root.\nrec: %x\nis:  %x", block.State().trie.Root, state.trie.Root)
 		return
 	}
diff --git a/ethchain/state_transition.go b/ethchain/state_transition.go
index 9e7ef3efd..31196d2d7 100644
--- a/ethchain/state_transition.go
+++ b/ethchain/state_transition.go
@@ -1,7 +1,6 @@
 package ethchain
 
 import (
-	"bytes"
 	"fmt"
 	"github.com/ethereum/eth-go/ethtrie"
 	"github.com/ethereum/eth-go/ethutil"
@@ -54,6 +53,7 @@ func (self *StateTransition) Sender() *StateObject {
 	}
 
 	self.sen = self.state.GetAccount(self.tx.Sender())
+
 	return self.sen
 }
 func (self *StateTransition) Receiver() *StateObject {
@@ -264,23 +264,16 @@ func Call(vm *Vm, closure *Closure, data []byte) (ret []byte, err error, deepErr
 	ret, _, err = closure.Call(vm, data)
 	deepErr = vm.err != nil
 
-	Paranoia := ethutil.Config.Paranoia
-	if Paranoia {
+	if ethutil.Config.Paranoia {
 		var (
 			context = closure.object
 			trie    = context.state.trie
-			trie2   = ethtrie.NewTrie(ethutil.Config.Db, "")
 		)
 
-		trie.NewIterator().Each(func(key string, v *ethutil.Value) {
-			trie2.Update(key, v.Str())
-		})
-
-		a := ethutil.NewValue(trie2.Root).Bytes()
-		b := ethutil.NewValue(context.state.trie.Root).Bytes()
-		if bytes.Compare(a, b) != 0 {
+		valid, t2 := ethtrie.ParanoiaCheck(trie)
+		if !valid {
 			// TODO FIXME ASAP
-			context.state.trie = trie2
+			context.state.trie = t2
 			/*
 				statelogger.Debugf("(o): %x\n", trie.Root)
 				trie.NewIterator().Each(func(key string, v *ethutil.Value) {
diff --git a/ethchain/vm.go b/ethchain/vm.go
index 909b375ae..35443a6ba 100644
--- a/ethchain/vm.go
+++ b/ethchain/vm.go
@@ -35,7 +35,6 @@ func CalculateTxGas(initSize *big.Int) *big.Int {
 }
 
 type Vm struct {
-	txPool *TxPool
 	// Stack for processing contracts
 	stack *Stack
 	// non-persistent key/value memory storage
@@ -617,48 +616,59 @@ func (vm *Vm) RunClosure(closure *Closure) (ret []byte, err error) {
 		case CREATE:
 			require(3)
 
-			value := stack.Pop()
-			size, offset := stack.Popn()
+			var (
+				err          error
+				value        = stack.Pop()
+				size, offset = stack.Popn()
 
-			// Snapshot the current stack so we are able to
-			// revert back to it later.
-			snapshot := vm.state.Copy()
+				// Snapshot the current stack so we are able to
+				// revert back to it later.
+				snapshot = vm.state.Copy()
+			)
 
 			// Generate a new address
-			addr := ethcrypto.CreateAddress(closure.caller.Address(), closure.caller.N())
+			addr := ethcrypto.CreateAddress(closure.object.Address(), closure.object.Nonce)
+			for i := uint64(0); vm.state.GetStateObject(addr) != nil; i++ {
+				ethcrypto.CreateAddress(closure.object.Address(), closure.object.Nonce+i)
+			}
+			closure.object.Nonce++
 
 			vm.Printf(" (*) %x", addr).Endl()
 
 			// Create a new contract
 			contract := vm.state.NewStateObject(addr)
-			contract.Amount = value
+			if contract.Amount.Cmp(value) >= 0 {
+				closure.object.SubAmount(value)
+				contract.AddAmount(value)
 
-			// Set the init script
-			contract.initScript = ethutil.BigD(mem.Get(offset.Int64(), size.Int64())).Bytes()
-			// Transfer all remaining gas to the new
-			// contract so it may run the init script
-			gas := new(big.Int).Set(closure.Gas)
+				// Set the init script
+				contract.initScript = mem.Get(offset.Int64(), size.Int64())
+				// Transfer all remaining gas to the new
+				// contract so it may run the init script
+				gas := new(big.Int).Set(closure.Gas)
+				closure.UseGas(closure.Gas)
 
-			// Create the closure
-			c := NewClosure(closure.caller,
-				closure.Object(),
-				contract.initScript,
-				vm.state,
-				gas,
-				closure.Price)
-			// Call the closure and set the return value as
-			// main script.
-			var err error
-			c.Script, gas, err = c.Call(vm, nil)
+				// Create the closure
+				c := NewClosure(closure, contract, contract.initScript, vm.state, gas, closure.Price)
+				// Call the closure and set the return value as
+				// main script.
+				contract.script, err, _ = Call(vm, c, nil)
+			} else {
+				err = fmt.Errorf("Insufficient funds to transfer value. Req %v, has %v", value, closure.object.Amount)
+			}
 
 			if err != nil {
 				stack.Push(ethutil.BigFalse)
 
 				// Revert the state as it was before.
 				vm.state.Set(snapshot)
+
+				vm.Printf("CREATE err %v", err)
 			} else {
 				stack.Push(ethutil.BigD(addr))
+				vm.Printf("CREATE success")
 			}
+			vm.Endl()
 		case CALL:
 			require(7)
 
diff --git a/ethcrypto/crypto.go b/ethcrypto/crypto.go
index 8cb0be88c..b4bb881a0 100644
--- a/ethcrypto/crypto.go
+++ b/ethcrypto/crypto.go
@@ -3,8 +3,8 @@ package ethcrypto
 import (
 	"code.google.com/p/go.crypto/ripemd160"
 	"crypto/sha256"
+	"github.com/ethereum/eth-go/ethutil"
 	"github.com/obscuren/sha3"
-	"math/big"
 )
 
 func Sha256Bin(data []byte) []byte {
@@ -28,8 +28,6 @@ func Sha3Bin(data []byte) []byte {
 }
 
 // Creates an ethereum address given the bytes and the nonce
-func CreateAddress(b []byte, nonce *big.Int) []byte {
-	addrBytes := append(b, nonce.Bytes()...)
-
-	return Sha3Bin(addrBytes)[12:]
+func CreateAddress(b []byte, nonce uint64) []byte {
+	return Sha3Bin(ethutil.NewValue([]interface{}{b, nonce}).Encode())[12:]
 }
diff --git a/ethtrie/trie.go b/ethtrie/trie.go
index 194c98006..38c78e7f4 100644
--- a/ethtrie/trie.go
+++ b/ethtrie/trie.go
@@ -1,6 +1,7 @@
 package ethtrie
 
 import (
+	"bytes"
 	"fmt"
 	"github.com/ethereum/eth-go/ethcrypto"
 	"github.com/ethereum/eth-go/ethutil"
@@ -8,6 +9,19 @@ import (
 	"sync"
 )
 
+func ParanoiaCheck(t1 *Trie) (bool, *Trie) {
+	t2 := NewTrie(ethutil.Config.Db, "")
+
+	t1.NewIterator().Each(func(key string, v *ethutil.Value) {
+		t2.Update(key, v.Str())
+	})
+
+	a := ethutil.NewValue(t2.Root).Bytes()
+	b := ethutil.NewValue(t1.Root).Bytes()
+
+	return bytes.Compare(a, b) == 0, t2
+}
+
 func (s *Cache) Len() int {
 	return len(s.nodes)
 }