Jekke - Yekke

Many thanks to Steven for this nice explanation.
In Israel many people believe the word is an abbreviation of "יוצאי קהילות אשכנז".
Rav Hamburger told me there are many explanations given to this name, and there was no explanation that he could point out as the correct one. He did mention that the Germans in general (including the gentiles) were called Yekkes by the Slavic nations, and so were the Jews called in Germany, so therefore it cannot be an abbreviation of יוצאי קהילות אשכנז. On the other hand the reason Steven gives could explain the fact the Germans and the Jews still in Germany were called this way.
The Ramban in Parshas Vayechi (Breishis 49:10) explains the words ולו יקהת עמים saying these words:
בעלי הדקדוק אמרו ביקהת ששרשו יקה, ופירשו בו לשון משמעות וקבול המצוה
In free translation this means that a Yekke is someone with proper discipline, and therefore he follows and fulfills the Mitzvos.
Rav Yonah Merzbach liked pointing at this Ramban.

Michael

I discussed this again with Rav Hamburger and he said that the research done by historians did not get to an agreement on this issue, but most of them hold that it was a term used by the Slavic nations which means something like "Joke", a name they gave the Germans out of jealousy trying to make fun of them, since they were much more sophisticated and more well off than them. Later the Eastern European used this for the same reason trying to make fun of the Western European Jews. This is the reason Rav Schwab at first was against using this term.

Later this term lost its negative meaning and just became a nickname of the western Jews, referring to their jacket, and today the word Yekke is used with pride, referring to the serious and truthful way of living, as mentioned in the Ramban.

This is called - בא לנאץ ונמצא מברך.

Michael