Stupidity is contagious. It gets us all from time to time, and even respectable companies can catch it. As I do every week, let's take a look at five head-spinningly dumb financial events from the past seven days.

1. Something wicked this way apps
Apple (NASDAQ:AAPL) is celebrating the billionth download at its trendsetting App Store this week, but it's not hitting that milestone without a bit of controversy.

Heads turned this week when the company allowed a third-party Baby Shaker program to hit its virtual storefront on Monday. In a grim nutshell, the program basically features a crying baby that can only be silenced after you shake it to death. Apple pulled the program on Wednesday, realizing that it is "deeply offensive" to many iPhone and iPod touch owners who had access to the application.

I'm not a member of the moral police, but Apple needs to take one of two paths and stick to it. If it's going to stand itself up as an App Store filterer, vetting and rejecting programs that cross the line, then it has to do so actively and accountably. This isn't the first questionable program that has slipped through the approval cracks. There are even questionable rejections, like a South Park app and a third-party Sirius XM Radio (NASDAQ:SIRI) streaming program that never saw the light of day.  

The other path, of course, is to just stand back and let the markets do the vetting. Let user ratings and the free markets push up the worthy downloads and bury the worthless. After all, that's how Apple runs its iTunes Music Store.

As offensive as Baby Shaker is, I can assure you that songs with far more vicious lyrical content are being downloaded from iTunes to blare in public. I'm not suggesting that the second path is better, but for a company doing so well these days, it's not exactly succeeding by pursuing the first path.

2. Here come the eviction notices
Yahoo! (NASDAQ:YHOO) didn't only give 5% of its employees the boot this week. Residents of GeoCities are also being told to move out. Yahoo! is shutting down its once-booming site of free, user-created Web pages. It is no longer accepting new registrations, and existing users are being told the service will close down entirely later this year.

That's just stupid, Yahoo!. Forget that the company spent billions to buy GeoCities 10 years ago. It is now trying to nudge members of the site's long-established community -- most of them drawn to its promise of free web pages -- to pay up for Yahoo!'s hosting service. That won't fly.

Yahoo!'s revenue excluding traffic acquisition costs fell by 15% in the company's latest quarter. You would think that Yahoo! would want to grow its traffic, not bulldoze a cheap source of easy traffic and billable ad space.

3. Citigroup's fast one?
Citigroup (NYSE:C) CEO Vikram Pandit made a bold promise during this week's annual shareholder meeting, vowing to repay taxpayers "every dollar with interest."

However, as the Fool's own Morgan Housel pointed out, that's easier said than done, now that the government's $25 billion capital infusion is being converted into a mere 36% stake in the company.

"That makes repaying TARP much trickier than simply writing a check, as other banks have proposed," Morgan wrote. "For one thing, taxpayers are taking a massive haircut on that conversion. Citigroup currently has a market cap of about $17 billion, valuing that 36% stake at roughly $6.1 billion. Is it just me, or is $6.1 billion somewhat less than $25 billion?"

I guess we'll have to settle for every dollar with disinterest, then.

4. This frog is no prince
In more App Store news, LeapFrog Enterprises (NYSE:LF) hopped into the crowded niche with what the electronic toymaker calls its first "LeapFrog iPhone learning game."

Number Rumble may seem to be attractively priced at $2.99, but keep in mind that it's competing against hundreds of educational apps available for free. LeapFrog had a few hits several years ago with its LeapPad and Leapster educational toys, but Toys "R" Us was never stocking the playthings next to free learning toys.

I'm also wondering, since few kids between the ages of 6 and 10 actually have iPhones, whether parents are up to handing their kids their heavily subsidized smartphones for a game that challenges young children to "shake, tap and spin their way to math equation expertise."

Thankfully, the game is also available on the more accessible iPod touch. Still, why is LeapFrog calling this a "LeapFrog iPhone" series?

5. Bad to the Baidu
Baidu (NASDAQ:BIDU) got another black eye this week. It's facing a lawsuit in Beijing from one of its disgruntled advertisers, which claims that China's leading search engine buried the advertiser's site from organic searches once it reduced its marketing spend.

The money at stake isn't much. The court will have to decide who is right. However, Baidu's reputation could suffer a nasty blow if China begins to feel that it can't trust the relevance and authenticity of searches on the engine.

Baidu better hope that there's similar dirt to fling at Google (NASDAQ:GOOG), the country's distant silver medalist, or that it can clean up its own act thoroughly and quickly.

Let's beat the dumb drum:

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Longtime Fool contributor Rick Munarriz is a fan of dumb and smart business moves. Investors can learn plenty from both. Hdoes not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.