The California Attorney General is either incredibly naive or incredibly draconian in his thinking (complete article follows).

California Attorney General Bill Lockyer has called for a new law requiring bullets sold in the state to carry an identifying code.

The tiny serial numbers, which are almost invisible to the naked eye, would be inscribed on both bullets and casings with a laser. The codes would enable police to trace bullets used in a crime back to the buyer.

Speaking at a conference on gun crime in Los Angeles, Lockyer said the proposed law would be "a good tool to fight gangs and other criminal activity."

Although no U.S. state currently requires identification numbers on ammunition, the proposed branding technique is similar to that used to identify auto and aircraft parts. The process would add about one cent to the cost of each bullet.

Gun rights advocates have already registered their opposition to the proposed law, and it is considered likely that the issue will spark a major debate over gun control in California.

Those opposed to the law say it would require a costly bureaucracy to administer, yet it would be an easy task for criminals to bring in ammunition from out of state.

The problems are many -- apart from the ones mentioned in the article.

1. There would spring up a black market in hand loaded ammunition.  Bullet, powder, primers, and shell casings are available as individual components and even if they were required to have serial numbers on them the serial numbers could be defaced before assembly.
2. Shell casings can be reused many times before failure.  People could collect them from the local range, make their own bullets from melted down wheel weights (without a serial number), assemble the cartridges and the person who purchased the original shell casing would be blamed when his shell casing was used in a crime.
3. Collectively the private citizens of the U.S. go through billions of rounds per year.  Assuming CA consumes 1/10 of the total you still have something approaching a billion serial numbers to track each year.  No small task.
4. Stealing ammo is easier than stealing guns.  It's smaller and a missing box or even a few rounds from a box is much less likely to be noticed than a missing gun.
5. If the numbers are nearly invisible to the naked eye then someone could swap out a few rounds from a different box either in the store at the range when the owner wasn't watching and the wrong user would get blamed.

I'm sure there are lots of other things wrong with this idea, but you get the point.  It's far too easy to get around.  Just like gun serial numbers and registration of them (crimes solved via gun registration lists are almost non-existent) only worse.

[Update]: CCRKBA has issued a press release on this hare-brained scheme.