News that Newt Gingrich was receiving millions of dollars to advise Freddie Mac has to be a little unsettling for at least some conservative voters, who are accustomed to demonizing the government-sponsored entities Fannie Mae and Freddie Mac for causing the housing bubble, and hence the recession.

But it's not just right-wing pundits like Bill O'Reilly who are fond of blaming it all on Fannie and Freddie. Here's ABC reporter Jonathan Karl, speaking in conservative shorthand in his job as network news correspondent on This Week yesterday:

Meet this week's new front-runner. He's a good debater, man of ideas, and now Newt Gingrich is riding high in the polls, which means now the spotlight turns to all his baggage. Exhibit A: the nearly $2 million he got from Freddie Mac, a government-backed mortgage company that made so many bad loans, it helped bring the economy down.

We'll set aside the stuff about Newt Gingrich, Man of Ideas (his most recent one involving having poor children replace janitors at their schools).

The more important question: Did Freddie Mac make the bad loans that crashed the economy?

No. You can read about that here or here, among many others. (UPDATE: To be clear, Fannie/Freddie don't actually lend money to people buying homes-- as McClatchy's Kevin Hall and David Goldstein explained back in 2008).

Or read this concise explanation from Fannie/Freddie critic Dean Baker,  part of this response to a David Brooks column on this subject:

The worst junk mortgages that inflated the housing bubble to extraordinary levels were not bought and securitized by Fannie and Freddie, they were securitized by Citigroup, Merrill Lynch, Goldman Sachs, Lehman and the other private investment banks. These investment banks gobbled up the worst subprime and Alt-A garbage that sleaze operations like Ameriquest and Countrywide pushed on homebuyers.

The trillions of dollars that the geniuses at the private investment banks funneled into the housing market were the force that inflated the bubble to its 2006 peaks. Fannie and Freddie were followers in this story, jumping into the subprime and Alt-A market in 2005 to try to maintain market share. They were not the leaders.

So why is conservative mythology being treated as if it were fact by Jonathan Karl? Because that's what he does.

Looking at last week's "whole series of bad reports on the state of the economy," Dean Baker of Beat the Press and the Center for Economic and Policy Research tells readers of London's Guardian (6/1/09) if they think "these reports might have led to gloomy news stories," such assessments are to be found "not in the U.S. media": "The folks who could not see an $8 trillion housing bubble are still determined to find the silver lining in even the worst economic news":

For example, National Public Radio told listeners that the new home sales figure reported for April was up from the March level. While this was true, the April figure was only 1,000 higher than a March level that had just been revised down by 5,000. April new home sales were 4,000 below the sales level that had originally been reported for March. USA Today touted a "surge" in durable goods orders, which was also based on a sharp downward revision to the prior month's data.

The media have obviously abandoned economic reporting and instead have adopted the role of cheerleader, touting whatever good news it can find and inventing good news when none can be found. This leaves the responsibility of reporting on the economy to others.

Predicting that "at some point it will be impossible to conceal the bad news, and Congress' attention will return to stimulus," for now Baker notes that "media's reality defying happy talk on the economy is delaying this moment." Read the recent issue of FAIR's magazine Extra!: "Stimulus Snake Oil: Media Promote Nonsensical GOP Talking Points (3/09) by Peter Hart.

While asserting the extremely simple journalistic principle that "Past Records Should Matter In Assessing Views on the Economy," Dean Baker (Beat the Press, 5/2/09) is willing to admit that

everyone makes mistakes, but the odds are that anyone who couldn't see an $8 trillion housing bubble is not a really good person to rely upon for predictions on the economy. Joe Nocera gives a quick survey of some radically conflicting forecasts in his [New York Times] column today.

It's worth noting that all the optimists completely the missed the bubble and the impact that its collapse would have on the economy. At least some of the pessimists, most notably Nouriel Roubini, recognized that the conditions for a serious crisis were being created years ago.

See the FAIR magazine Extra!: "Busted Bubble: The Press Fell Down on the Job on Housing Prices" (11-12/08) by Veronica Cassidy

Listening to "budget hawk" media figures who urge President Obama "to commit to spending cuts and/or tax increases" because they are "upset that the deficits projected for 2013 or 2019 are too large," Dean Baker (TPM Café, 3/25/09) finds it

especially annoying to hear the whining from this group of deficit hawks since their whining in prior years helped to drown out serious discussion of the dangers posed by an $8 trillion housing bubble. While some of us were yelling at the top of our lungs about the imminent disaster that would hit the economy when the housing bubble burst, the media chose to focus on these deficit hawks with their dire warnings about budget deficits 40 or 50 years in the future. Because the media and political elites chose to pay more attention to the deficit hawks than those warning about the housing bubble, we now get to enjoy the current economic crisis. And, one result of the economic crisis is (drum roll, please) . . . record deficits.

Compelled to "put the point so simply that even a Washington Post editor can understand it," Baker writes that, "because the media highlighted the views of the people who were ranting about the deficit rather than the views of people who understood the economy, we both got a wrecked economy and larger deficits."

Dean Baker (Beat the Press, 3/17/09) weighs in on Richard Cohen's defense of Jim Cramer, accusing the Washington Post columnist of "continuing the stream of excuses for the financial media's failure to warn of the economic crisis." Baker sees "an effort to imply that the issues involved were very complex" lying "at the center of the cover-up for the media's incompetence."

Baker's reply to the Cohen claim that "there was not much they [financial reporters] could do, anyway. They do not have subpoena power. They cannot barge into AIG and demand to see the books, and even if they could, they would not have known what they were looking at":

This is pathetic. Financial reporters did not need subpoena power, they did not need access to AIG's books, they did not even need to know what a credit default swap was. They just needed to know arithmetic.

The basic story is as simple as you can possible have. Nationwide house prices tracked inflation for 100 years from 1895 to 1995. In the decade from 1996 to 2006, they rose by more than 70 percent after adjusting for inflation, creating more than $8 trillion in housing bubble wealth.

There was no remotely plausible explanation for this increase in house prices on either the supply-side or the demand side. If there is a huge divergence from a 100-year long trend, with no explanation based on fundamentals, how could it be anything over than a bubble?

And who could have thought that the country could lose $8 trillion in housing wealth ($110,000 for every homeowner) without enormous consequences for the economy?

While assuring us that "exposing the corruption in the financial industry that supported the growth in the bubble...would have been a great public service," Baker insists that reporters "just needed to know arithmetic and have some common sense." His suggestion going forward: "How about a good news story explaining that even though nearly all economists completely failed to see the coming of the biggest economic disaster in their lifetime, none of them will suffer any consequences in their career? None will get fired and almost none of them will even miss a promotion. Reporting on the non-accountability of economists would be a very good story for financial reporters."

See the FAIR magazine Extra!: "Busted Bubble: The Press Fell Down on the Job on Housing Prices" (11-12/08) by Veronica Cassidy