The most direct consequence of large-scale bad debts of banks is that banks will close down; If the whole banking system is like this, there will be a financial crisis. For China, there are a lot of international hot money (mainly US dollars) hidden behind both banks and trust institutions. Hot money entered China, converted into RMB, and injected into the real estate market through shadow banks (or trust institutions), forming a huge real estate bubble. At the same time, because the issuance of RMB is linked to foreign exchange, this means that the influx of hot money will expand the total amount of money, which is one of the reasons for inflation.

Then, how does the inflow and outflow of US dollars cause a large number of bad debts of financial institutions? The Fed contracted its easing policy and slowly turned to the channel of raising interest rates. When the profit of dollars in the United States is greater than that in China, dollars will flow out of China in large quantities, taking away more dollars (profit part). The withdrawal of dollars will make the cash flow of shadow banks or trust institutions unsustainable, and it is difficult for these institutions to realize the funds invested in real estate and other real estate in a short time. Eventually, these institutions will run out of cash flow and then go bankrupt. A large amount of real estate invested by shadow banks or trust institutions is mortgaged to banks. After the bank went bankrupt, all it got was a house, which is the so-called bad debt.

You may also say that the house repossessed by the bank can of course be sold, but if the house price falls and people start to wait and see, the value of the house is not enough to deduct the total loan, and the bank will start to lose money. If such bad debts accumulate, the bank will eventually fail.

Now back to how to affect people's lives: there are probably several kinds: inflation, people's wealth shrinking; The interest rate of bank loans has risen, and people who buy houses with loans are miserable; When the real estate collapses, a large number of investment companies flee, and the money of ordinary people is hollowed out, or these people can't retreat, jumping off a building is exempt. In fact, these stories in Wenzhou were staged in 2008.

As for investment, personally, the first investment is to cash the only wealth into dollars, which is the pricing currency of assets. Stocks are unreliable, and real estate is unreliable. It is also good to make some stable industrial investment.

That's all. I just watch the news and learn something. It's just an amateur exchange.