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I suppose we were supposed to be laughing at how stupid and small minded americans in 'fly-over country' were in Borat. But as it turns out they actually acquited themselves rather well. There really wasn't any truly embarassing moment. What was embarassing is how hard Borat tried.
If you want to see regular americans embarass themselves- the late night comics occasionally have these 'men on the street' type interviews with regular americans- and most of them couldn't hardly name the three branches of government. Now that is genuine embarassment. Howard Stern will do that with his guests too.