In the context of Sherman Alexie 's work, this line is a reference to the continued suffering of the Native American or Indian people, to whom almost everything seems to have the capacity to become "a noose"—something which traps them and which leads to their demise. The line is in...
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reference to an Indian who has died by suicide via car crash; the narrator says he does not know why the Indian did this, but that it is completely understandable, when Indians "taste failure in the tap water" and "shake with old tears." He is suggesting that, because Native Americans have been punished for so long and have experienced such endless bad fortune as a result of the way they have been treated, it becomes easy for them to picture anything and everything as a "noose," or a way out. Having lived in this world under those conditions, watching terrible things happen, something that should be innocuous, like a car, can begin to represent something else—in this case, a means of escape. The car is the noose—but so are all the other difficulties facing the Indians. In a world that mistreats them, it is easy to become convinced that death and failure threaten from all directions, with the result that taking one's own life is viewed as a way of to take a modicum of control of the situation.
Out of context, the following quote has a very defined meaning:
Believe me, everything looks like a noose if you stare at it long enough.
What this quote means is that certain points in a person's life things begin to develop a certain meaning, possess a certain image for the interpreter.
For a person threatened by the noose, they would come to see the noose as representative of the unimportance of their life. Everything that they regarded they would do so with the thought that a bad decision could bring an end to their life.
The noose represents the "thing" which hangs over everyone. Every person has their own personal noose: money, pain, solitude, and so on. People who look at life in this way see the visual representation of their nemesis in every decision that they make in life.
As for the noose, it represents the fact that no matter where one turns, the noose represents the fact that another person holds their life in their hands.