NEW YORK ( TheStreet) -- Henry Ford once famously said that "history is bunk," and solar investors may be saying the same thing these days about guidance from the solar industry. On Wednesday, Germany announced a proposal to slash its solar feed-in tariffs by 15% on rooftop and open-field projects, and 25% on farmland projects. What's more, Germany may move ahead with a soft cap on solar, which would trigger a further tariff reduction of 2.5% if an annual 3.5 gigawatt capacity target is reached. It is not an exaggeration to say that a sizable portion of the solar supply/demand balance rests on Germany's ability to absorb capacity from the solar industry. To be fair, the rest of the world's solar capacity is expanding rapidly, and markets like Italy are poised to grow in 2010 specifically. Still, whether Italy's solar growth is only to be a short-term boom before a bust remains an open question, too. Germany sent a big message to solar players in its proposed changes on Wednesday, particularly with the proposed soft cap on overall solar capacity: Germany won't be the "demand sink" for solar any longer. Will the rest of the world catch up in time to offset Germany's slap in the face of solar? That question is hard to answer, and Germany has not officially acted yet. Still, one thing is clear: if Germany moves ahead with a proposed April tariff reduction of 15% on rooftop systems, the big second-quarter bounce that has driven solar shares ever-higher, will not occur. An FBR Capital Markets analysis published on Friday by its solar analyst Mehdi Hosseini indicated that solar players are already reacting as if the 15% rooftop reduction in feed-in tariffs is a fait accompli.