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Pendejo is a vulgar Spanish-language term of abuse. To call a person a pendejo is essentially to call him stupid, although it also carries implications of wilful stubbornness and rank ineptitude.
On the west side of San Antonio, Texas, I discovered that pendejo means more than just stupid which is what I had been told. The conotation on the west side had more to do with being called a fucking idiot. Naturally, this was not taken too well and required some fancy explaining to get out of. Tex-Mex slang is tricky stuff.