Over the past couple of weeks, there's been a hyped-up discussion over immigration, and the Interior Minister (Seehofer, CSU) has laid down the path he wants to take.
Unfortunately, Merkel, the minority of CDU folks, and the SPD....along with the Greens, Linke Party, etc....don't agree with Seehofer's vision of migration in the future.
There's a meeting that was held in the past day or two, with Merkel checking her leadership within the CDU Party top level. Basically, she found three people in full support....most either don't agree with her, and don't see how this problem can be resolved.
The talk is.....(1) Merkel has to leave or resign, (2) Seehofer will have to go (which means that the CSU might end the pact-agreement for this coalition, (3) a middle ground is found, or (4) nothing is resolved and they just keep going with a screwed-up policy program.
If Merkel did leave or resign....would the government continue? Yes, but with some new figure leading the CDU. There's no real way to say if that fixes anything, or if new elections might be the next step.
If you did have a new election right now? Well....the SPD would likely be screwed and not get past 18 percent of the vote. This would also damage the legacy of Chancellor Merkel to leave in this type of situation.
So most folks are suggesting some type of compromise where Seehofer gets a fair number of changes, and has to settle on two or three things which benefit migrates.
A big mess? You could easily wake up in two weeks with Merkel resigning, and the CDU racing around to get to their new leader.