Pakistan is sliding. Taliban commanders are taking over more of the country's ungoverned north-west by the day. From there they launch attacks into Afghanistan, killing nato soldiers and countless Afghans. America, hitherto a remarkably forgiving ally, appears to think Pakistan's Inter-Services Intelligence (isi) is assisting them. India certainly thinks so. Tensions between South Asia's nuclear-armed rivals are rising. After a suicide-bomb attack on the Indian embassy in Kabul last month-which India blamed on the isi-its national security adviser, M.K. Narayanan, warned that India might have to "retaliate in kind".rnThe economy is hell-bound. Inflation is running at 25% a year. The stockmarket in Karachi has lost 35% of its value since April. During blackouts, Pakistani businessmen trade tales of capital flight. Foreign-exchange reserves-once emblematic of economic recovery-now barely cover three months of imports.
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