"the older boy is somewhat a bully and one of the best ways to deal with it is to ignore them and show no fear, it takes away their power "

Out of curiosity, has this ever worked for anyone ever? Ignoring a bully makes them stop? Really?

As an adult here are my two thoughts: 1. An adult (say you) should talk to the teacher to alert them to the situation. I put up with a lot as a kid that I wish I could have gone back in time and told myself I didn't have to, just because I had some ridiculous mental block against tattling. Adults control the culture and the environment, and that kind of behavior does not have to be allowed. 2. If the adults are unwilling to foster a more mature culture, then the best way to deal with these verbal bullies is to laugh with them instead of being laughed at. Some people do this kind of crap as a way to bond. That doesn't make it right, but acting as if it's funny and they're doing it not to be mean but as one of those bonding things does seem to decrease the viciousness and makes it less entertaining, even promotes friendship. Not that it's worth being friends with people who interact that way, but that's probably how their parents interact with them so they don't know any better.