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It's a fantastic idea - I just finished reading Neil Stephenson's 'Snow Crash' and think that a real life floating city would be an incredible feat of engineering. If it could be made safe and economically viable, it could be the beginning of a huge shift in how our populations organise themselves.
To those who wonder what would happen when a typhoon comes, I guess they'd do the same things that people in the Carribean and Florida do when a hurruicane comes.
And crazy psychos, prisons etc - yes of course, you're going to have to provide the same things that any small town is going to need - people's basic requirements aren't going to change just because they're on open water.
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