Having kept mostly silent during the past week when Deutsche Bank stock was crashing, its default risk soaring, and only a spurious rumor by French AFP, based on a Twitter report, prevented the bank's stock from going into a three day weekend at all time lows, on Saturday the German press woke up to the ongoing local banking crisis, reiterating what stoked the crisis in the first place, namely Angela Merkel's statement last weekend that it won't bail out Deutsche Bank.

Repeating not only what Merkel herself said last week - a statement which first prompted this week's plunge in DB stock - but what we have said all along, namely that a bailout of Deutsche Bank would be political suicide for the Chancellor due to pressure from AfD, and may lead to the collapse of Europe, where other nations, namely Italy, have been pushing for a similar bailout of their own banking systems only to be met with stern denials by German, Reuters reports that according to much of the German media, Angela Merkel cannot afford to bail out Deutsche Bank given the hard line Berlin has taken against state aid in other European nations and the risk of a political backlash at home. 

Last week's events, which have prompted numerous flashbacks to that certain historic week in September 2008 when Lehman failed after counterparties yanked cash from the doomed bank, culminated when the German government denied a newspaper report on Wednesday that it was working on a rescue plan for the Germany lender, unleashing a plunge in DB shares, which was accelerated after a Bloomberg report that hedge fund counterparties to DB's prime brokerage had quietly withdrawn cash from the bank.

Only a so-far unconfirmed and very improbable report on Friday morning that the DOJ is willing to cut the $14 billion penalty to DB by more than half, prevented the stock from plunging further into the Friday close. 

And while we wait to find what the real story about the DOJ's settlement decision is, Germany's press is already making it clear - once again - that a Deutsche Bank bailout is out of the picture.

As Reuters adds, Germany, which has insisted Italy and others accept tough conditions in tackling their problem lenders, can ill afford to be seen to go soft on its flagship bank, the Frankfurter Allgemeine wrote. "Of course Chancellor Merkel doesn't want to give Deutsche Bank any state aid," it wrote in a front-page editorial. "She cannot afford it from the point of view of foreign policy because Berlin is taking a hard line in the Italian bank rescue."

The Munich-based Sueddeutsche Zeitung wrote that Merkel would be breaking a promise to taxpayers if she were to bail the bank out, which could spell disaster for her re-election bid next year as the anti-immigration AfD party gains ground. The AfD is already benefiting from a backlash against Merkel's open-door refugee policy, making huge gains in two regional elections last month and hitting an all-time high of 16 percent support in an opinion poll last week.

"A state aid package would drive voters into the arms of the AfD," the Sueddeutsche wrote in an editorial. "Domestic political considerations make it unlikely that Berlin would play this joker. Even more unlikely is that the European Commission would agree. The political risk would be simply too high."

The Stuttgarter Zeitung wrote on Saturday: "Deutsche Bank has to win back ground here because as exaggerated as the reports of an existential danger to the bank may have been, just as obvious are its continuing difficulties."

"Trust is a bank's most important currency" it concluded, seemingly oblivious that it was an unsourced report, one which will likely end up being a fabrication, that led to the biggest rebound in DB stock in years just to prevent a potential depositor bank run during Germany's holiday weekend.

And here is why it was so important to prevent a late day rout in DB stock: the head of Germany's financial regulator warned on Saturday of "negative perceptions that could lead to downward spirals on the markets", at the end of a week that saw Deutsche Bank shares battered by a crisis of confidence. 

In an interview with the Frankfurter Allgemeine Sonntagszeitung newspaper due to be published on Sunday, the head of Bafin, Felix Hufeld, declined to comment specifically on Deutsche Bank, Germany's biggest bank. But he said: "I warn people not to let themselves be drawn into a kind of downward spiral of negative perception. Not every nervous market reaction is backed by objective facts."

While we applaud the idealistic German press for holding out such a hard line stance, we are certain that the collective sentiment will quickly change if and when some €560 billion in German deposits are suddenly in danger of being either bailed-in or defaulted upon, and - just as in the US - will promptly demand a taxpayer funded bailout if confidence in DB once again vaporized, leading to the next leg lower in the bank's securities.

And perhaps sensing what the endgame is, overnight Bank of Italy Ignazio Visco told Italian daily Il Foglio that state aid for Italian banks is something that "should be considered even if it remains a remote possibility."

"It is wise to get ready for the idea of state aid even if that does not mean it will be necessary," Visco told the newspaper.

We doubt Visco is so naive not to realize that the mere speculation that state aid is on the table is usually more than sufficient to lead to a self-fulfilling prophecy where it is also used as a result of investor and depositor panic of what comes next.

Luckily for Italy, Germany may itself have to do the same in the not too distant future, so at least Merkel's opposition this time around will be far more muted, if any.