Confusion Says

Is it just me or are racial relations getting more confusing?

I was recently sitting in with a large group of people from "all walks of life".
One person asked another if he was Middle Eastern. The man replied "no", he was from Egypt. The first man said "oh, you're African-American?"
Immediately, the Egyptian responded "yes" and another person (no idea what race she was) & a black man answered in stereo "he's not black".
This, of course, started a whole heated discussion on the subject: what defines race- background or skin-color, differences between "Hispanic" and "Latino", and a very similar argument to the one above regarding people from India and Asian-Americans.

Believe it or don't, I was mostly silent through most of it only speaking when I could threw in a few facts (like the Blood Quantum laws for Native Americans). From what I could gather from listening, logic and uniformity did not have much to do with the whole thing (and that's before getting into the prejudices these people had)- most everyone fell back on skin color as the deciding factor.

A woman and I argued that phrases like "African-American" and "Asian American" are misleading if only skin color determines whether you can claim to be in one of these groups. For example, a Caucasian born in Africa moves to America and is naturalized- logically that person is "African-American". This was met with boos from a few sides who claimed "because he wasn't black, he's not 'African-American'". The woman's next query was what if someone's 1/8th black? The answer she got? "What does he look like?"- from 2 different men, one who was black.
The woman was later called racist and "white". She pointed out that she was, in fact, Hispanic.

All I came away from this was that:
1) Each individual has their own conception of "PC".
2) A "minority" can be as racist as any "majority".
3) Most people are inherently stupid.