Nobel Prize-winning economist and New York Times columnist Paul Krugman did not seem to understand the Treasury Department's toxic asset relief program when he criticized it as "financial hocus-pocus" today, National Economic Council Chairman Larry Summers said Monday.

Firing back at the liberal economist, who accused President Obama of "squandering his credibility" on the Public Private Partnership Investment Program (PPPIP) announced today, Summers said he was surprised by the usually friendly pundit's words.

"I was surprised by Paul's comments," Summers told Bloomberg News on Monday. "He didn't seem to recognize that this is one component of the plan, and I don't know of any economist who doesn't believe that better functioning capital markets in which assets can be traded are a good idea."

Futhermore, Summers accused Krugman of not actually recognizing what was announced today.

"Paul has views on the state of the banking system. Certainly many observers don't share those views," Summers declared. "But more relevantly, that wasn't what today's announcement was about."

Summers added: "I didn't understand his argument."