I think it is great that you are standing up for your friend. Just be certain that the name calling wasn't something done in jest or as an inside joke. For example, my uncle considers himself the perfect asshole and quite likely would have taken the statement as a compliment. We like to indulge him often, but always fun and lighthearted.

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Perspective Alters Reality

Facebook friends aren't like real world friends.

Yeah, gotta make certain that the whole thing wasn't in jest or from a misunderstanding.

Still, if it's unjustified, stand up for your friends, or offer to mediate. Too many times we don't talk to each other and clear things up. (It's why emoticons can be so handy when texting.)

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Benefits, not features; benefits, not features

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Sighhh

Why do men snore when lying on their backs?
Because their balls fall over their butt holes and they vapour lock.

Hmm... it is definitely an Aussie thing to use what should be considered insults as terms of endearment. Of course, we also have the tendency to respond to an out and out insult with the very genuine reply of 'thank you!'

I believe it stems from the Poms. In my family (I'm first generation Aussie with English parents), sarcasm is as natural as breathing and while many would say that sarcasm is the lowest form of wit, they just haven't been around masters of the craft to see how truly intricate it can be. As my mother says, a simple answer is just that - simple. Going to the effort of thinking up and executing a snappy reply shows you care.

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Exaggeration misleads the credulous and offends the perceptive. ~Eliza Cook