Wow, I absolutely do not believe that people deserve the terrible things that happen to them. That would be extremely illogical and anyone who believes such must be happy when their own tragedy strikes. I do not believe in karma. Furthermore, terrible things happen to babies and children all the time.
No, I don't believe terrible things happen to terrible people. Often, the opposite is true. People who do bad things often thrive while those who do good things experience tragedy. The idea of Karma, that you receive from the universe what you put out into it, deals more with the emotional and spiritual context of life. A person who is constantly negative or hurting other people will feel emptiness, sadness, or other negative emotions. A person who is often helping others and trying to do good things will feel happier, more fulfilled and experience more positive emotions. From the Christian perspective, God does not punish people in that way. He does not send bad things or create tragedies. Christians do believe that God works through these bad things to lead us toward his will.
From the Christian perspective, one might consider that bad experiences are not punishments from God, but instruments of his will. Everything that happens is considered part of his plan—not punishment, but divine plan. Now, God gave man freedom of choice, and it is possible that bad things happen because man chooses badly. However, God still achieves his will.
I personally don't view the world in this way, but it is a common understanding in the Buddhist religion that a person's karma is a result of his actions. Bad things happen to people who do bad things as a kind of cosmic retribution for bad deeds. I just don't think that bad things happen solely due to past actions. There are just so many sad stories about people who have more than their fair share of heartache and for no apparent reason. A tornado can destroy the home of a good person as easily as it can a bad person. I don't think the tornado is a punishment for the bad person.