Game Of Thrones 2×3 REACTION! “What is Dead May Never Die”

It would be better if you chose a darker background. The brightness left me blind for a few seconds.

When the Starks took Theon, they took him as a hostage against future rebellions – if the Greyjoy's rose up again, Theon would have paid with his life. Also, the Greyjoy's were defeated, they weren't going to be at fighting strength any time soon. The Starks would not have accepted Balon as a hostage instead of Theon – following the Greyjoy Rebellion and defeat, they needed an adult leader who would comply, not a heir who was just a boy.

To Balon, I think losing Theon to the Starks was almost as bad as losing his sons in battle, sort of like shaming his defeat. He was in no position to keep hold of his last remaining son, so Balon focused everything on his daughter being his heir instead. And because he'd accepted his daughter as his heir, he was not going to beg and accept further defeat from the Starks in trying to get Theon back. I'm not trying to be sympathetic to him, he has pride and he's bitter, but the Ironborn are very unsentimental people.

Ah fuck I got college gonna watch this when I get home

You are right to call out Balon for his pride. The letter was not written in a way that showed him respect and that pretty much destroyed any chance of an alliance. He was already embarrassed once and he still holds a grudge.
Here's Balon's reaction to Theon giving him the letter in the books:

“The pup says nothing about a reward. Only that you speak for him, and I am to listen, and give him my sails and swords, and in return he will give me a crown.” His flinty eyes lifted to meet his son’s. “He will give me a crown,” he repeated, his voice growing sharp.

“A poor choice of words, what is meant is—”

“What is meant is what is said. The boy will give me a crown. And what is given can be taken away.”

Oh shit! it's 1:52 am here and i was bored as hell. Thank you =D