I think there will be a government bailout of Deutsche Bank this year. Commerzbank may be in equally bad shape. Its shares are sliding.

If Germany's government must intervene, then European depositors will ask themselves: Which banks are safe?

They can deposit euros in banks in every nation in the euro zone. But which banks? Which nations? Germany has been the favorite.

Some hedge funds are now pulling money out of Deutsche Bank. Bloomberg reports:

The funds, a small subset of the more than 800 clients in the bank's hedge fund business, have moved part of their listed derivatives holdings to other firms this week, according to an internal bank document seen by Bloomberg News. Among them are Izzy Englander's $34 billion Millennium Partners, Chris Rokos's $4 billion Rokos Capital Management, and the $14 billion Capula Investment Management, said a person familiar with the situation who declined to be identified talking about confidential client matters.

To pull out, they must put in. This is digital money. To get your digital money out of Bank A, you must have it sent to Bank B. This is essentially simultaneous. So, the banking sector as a whole is not imperiled. The money supply does not shrink. But confidence erodes.

I don't see any nation's banks in the euro zone competing successfully with Germany. The Netherlands has conservative banks, but they are small. Austria is also known for its conservative banking. But the money will probably stay inside Germany's banks.

If the government lets the bank go under, that will send a message to depositors in other countries: Germany is no longer a safe haven. Depositors — especially large depositors — will have to do due diligence in selecting banks. But today, they don't have a lot of time. They must get off the sinking ship before it takes down its depositors. A haircut is looming.

This is making Brexit look wise in retrospect. The Brits never did join the euro zone currency system. Their departure has caused no crisis in Britain. The talk about recession and trade crisis was all nonsense. The stock market is up.

Now we see Germany's banks under siege. If the strongest banks in the euro zone are facing a crisis, then what of Spain, Italy, Portugal, and France?

This is sending warning signals to the Eurocrats. The EU and its bureaucracies are looking shaky. The benefits of staying in will not be clear if the euro zone currency system falls apart. Nations will demand sovereignty over banking. This means a return to national central banks and national currencies.

Merkel can assure voters that her government will not bail out Deutsche Bank. I think she will back down if the alternative is bankruptcy. The bank now owes $14 billion to defrauded mortgage borrowers. The total capitalization of the bank is $14 billion.

It all looked so easy in 2007 when the bank's shares were selling for 100 euros. Today, they are around ten.