My children interact with other kids who have a hand out with a harsh sense of entitlement. We call those kids assholes spoiled and avoid them and their parents.  These kids are our apparent future banking leaders.

Banking executives were rewarded for bad decisions, just like the people who handed over the bailout money keep getting elected in spite of their own dysfunctional legacies. There is no greater irony I've witnessed than that of congress lecturing car companies on fiscal responsibility. The only thing worse than that was the pathetic car execs with their fake remorseful faces holding their hands out. Where is John Galt to tell them to get the hell out of his way?

There is apparently some ignorance in human behavior in the media. Fire, hot, burn. No more wood. Put it out.

Over the past year, homeowners have increasingly defaulted on mortgages, which has led to billions of dollars in losses for the pair of government-sponsored enterprises. That trend has also been one of the leading culprits in the deterioration in credit markets that has made it more difficult for companies in general to raise new capital.

Freddie has said it is committed to raising $5.5 billion to help shore up its troubled balance sheet – that is nearly twice the size of Freddie's current market capitalization of about $2.84 billion.

Fannie's (FNM: 4.87, -1.14, -18.96%) market capitalization is about $6.58 billion. Friedman, Billings & Ramsey Co. analyst Paul Miller estimates Fannie needs to raise between $5 billion and $10 billion in new capital.

But the prospect of government help has been one of the greatest hang-ups in efforts to raise capital from other investors.

Fannie and Freddie could raise those funds through non-governmental investors, but the cost would likely be severe in terms of interest or dividend payouts depending on the structure of the capital raise and in terms of dilution to current shareholders, analysts said.

"The cost of capital of this nature is just staggering," said Ladenburg Thalmann Inc. analyst Richard Bove. Fannie and Freddie could likely raise capital, but it would cost them so much during the current downturn in the credit market that it is unattractive, Bove said.

The government didn't bail out Enron (which would have saved us all from the Senate's showboating masquerading as a trial). Companies go out of business every day. I always thought that grim potential was motivation enough for businesses to work at avoiding disaster.

In the above quoted article, notice how the potential of government bailout devalues the company. It's not because a massive safety net of tax dollars motivates companies to do their best to turn a profit. Look at Amtrak.

What makes Fannie and Freddie so special they can't make mistakes and learn from them? Investors know a sour deal when they see it and US government-based endeavors do not turn profits. If there was no bail out and investors did come to the rescue, there would be some changes to turn Fannie and Freddie around. Investors with that kind of capital do not like to lose money.

"We wanted to know how far the Internet had gone beyond the simple exchange of information and were extremely surprised," said Bhawani Singh, managing director of consumer research at ACNielsen Europe. "This medium is far bigger than we expected, and it is clear to us that many retailers and marketers are not using it to its full potential."

That is the quote of the day. According to the study the biggest sellers online are books, DVDs, and music–adult content was excluded from the overall study. That leaves millions of products and services online that have yet to be properly marketed. In addition to confirming that Internet users actually do spend money, it exposes how consumers are in sort of a rut.

Right now, if books and movies and music are what most people are comfortable in purchasing, then what does that say about other industries? Even within retail, there seems to be a need for more savvy marketing and product placement. This is not to say that spam or other obnoxious "marketing" is necessary. But I'm not entirely convinced company's have completely bought into e-commerce strategies that work. Just throwing up a shopping cart on a site is not going make sales. What will make sales are:

• Customer comfort with privacy and security
• Values that can't be found in real-world stores
• Unique products or product packages only available on the Web
• Easy return policies
• Enhanced product information and customer reviews

Amazon has it right in many cases. However, they are still using their books and music paradigm. I'm starting to wonder if the online shopping experience needs to be as unique as the products. Can the shopping environment change based on the type of product and even the pricing? The answer is yes it can. But how to pull it off takes time, money, research, and an enormous amount of creativity.

It appears that Krispy Kreme's approach to growth still continues to backfire.

Krispy Kreme Doughnuts Inc. shares dived as much as 15% Monday after the retailer said that it purchased equity it didn't already own in a Philadelphia franchisee that had filed for bankruptcy protection and owed the company $24.1 million.

….

The company has faced a number of heady issues in the last year, including an SEC investigation into accounting issues related to franchise purchases.

In January, Krispy Kreme forced out Chief Executive Scott Livengood and other senior managers. Cooper, a restructuring artist from Kroll Zolfo Cooper, was retained to clean up the financial issues and put the doughnut maker back on track.

Meanwhile, the company has been facing a number of lawsuits from both shareholders and franchisees.

Krispy Kreme is going to go down in business history as the ultimate example of how to achieve diminishing returns in record time. Krispy Kreme has been analyzed to death. There's no need in talking about the mismanagement, accounting screw-ups, and the overall growth-with-no-direction strategy. So I'll talk about it from the everyman point of view.

If the Krispy Kreme executives would have stepped out of their ivory towers and actually visited some stores, maybe wearing some jeans and a concert t-shirt, they would found early on a cult-like following. I remember standing in line waiting for a hot, fresh, luscious, pillowy circle of delight. One guy I didn't know started talking to me about how he'd drove over an hour to get some Krispy Kreme since there was none where he was.

Jump ahead in the future five years. I can now buy Krispy Kreme at a freakin' gas station. A gas station? Come on! They have them at Target and Krogers. That's just covered in wrong. What once was a special product that people would seek out for the sheer near-sexual pleasure is now as ubiquitous as ballpoint pens.

Didn't these guys go to business school? They had the ultimate in a controlled supply and demand product. They could have throttled back the supply and rode the sugary wave of success for decades.

I knew it was over when the other day, one of my old coworkers, who used to share the Krispy Kreme love with me like some kind of drug, kind of shrugged off Krispy Kreme as nothing special.

Sadly, there can be too much of a good thing–even doughnuts.