IT is frequently, and incorrectly, assumed that only the poor are affected by the state of the economy. Or, at least, is no longer correct, for the state of the economy is affecting everyone. The stock market of a country is supposed to be a barometer of its economy, and is supposed to reflect long-term expectations about the economy. This is not the case yet with Pakistan, partly because not enough of the economy has come within the stock exchange, not yet being part of public limited companies quoted on the bourse. However, the Karachi Stock Exchange still forms an important measure of how the economy is doing, and the government in office never tires of claiming credit for the stock market moving upwards. However, when it moves downwards, as it did last week, when the KSE-100 Index closed at 9151 points, a fall of 687 points, the government either maintains a sphinx-like silence, or claims that it has nothing to do with market movements. Whichever response it adopts, it is careful to ignore those who have lost heavily on the stock market, at the most labelling them 'speculators, as if they deserve what happened to them. However, apart from the stock market, the real estate market has also collapsed. The result has been attributed, in both cases, to the USAs War on Terror. It is true that industry, as well as the real estate market, depend on a secure environment to exist in. It is also true that the security environment has declined considerably ever since 9/11. Pakistans participation in the War on Terror has not brought the Pakistani businessman the stability he needs to make progress, and what is probably more important, to invest, whether in plant, or stocks, or even real estate. Real estate has not exactly collapsed, because prices have not really declined, but transactions are not occurring. However, this one-time refuge of the middle class is not yielding the returns of the past, and the investor does not know where to go, because the War on Terror has made sure that what was once a booming economy is now merely limping. The Pakistani consumer is not seeking extraordinary profits. He is merely seeking a refuge where he does not have to see his hard-earned savings shrink under the onslaught of the unprecedented inflation now afflicting us. Already inflation has made him not only give up all luxury, but also even food itself has been sacrificed by many. This is one of the costs of the War on Terror that its originators, the Americans, do not want to talk about. But it is a cost that Pakistanis have to pay, and it will go on being paid as long as Islamabad does not revise its policies.