OK, found the problem. Actually this turns out to be well known problem
with current nvidia drivers. The workaround is to turn powermizer off.
Create a file called /etc/modprobe.d/nvidia.conf with this in it:

options nvidia NVreg_RegistryDwords="PerfLevelSrc=0x2222"

I am opening a request that this should be provided as an option in the
nvidia driver package.

-- 
nvidia 185.18.36 completely unusable
https://bugs.launchpad.net/bugs/442345
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