Why would Germany buy a navy? One carrier and perhaps one or two transports is it.
Air force - Germany can’t afford to buy two or three fighters a turn, but it won’t need to if it can just bleed the Allied fleet out. 56 IPC for 20 is a great trade. Against a KGF, Germany should just buy a fighter, or perhaps two, per turn, depending on the Allied navy strength. The Allies have to pour more IPC into defensive fleet units, and Japan goes wild in Asia. Germany tanks in, and Japan expands.
Fighters parked in W. Europe can still be used against Karelia and move back to W. Europe.
UK isn’t going to be landing 8 units a turn immediately. In the proposed move, UK has three transports, and two infantry in London on the second turn. Transporting eight units a turn isn’t going to happen until UK gets builds some infantry, and builds a fourth transport. Of course, I know that you already know this, ncsswitch, I’m just clarifying.
Finally, UK either attacks the Baltic, or doesn’t. If UK attacks and retreats, it can deplete the Baltic fleet, but will probably be killed by the Baltic survivors and German air. If UK attacks to try to take the Baltic, the German air should be able to handle the survivors. If UK doesn’t attack the Baltic fleet, Germany can suicide at any time supported by massed air. Considering that UK’s attack power consists of a battleship, two fighters, and a bomber (with a weak carrier), any attack on the Baltic will be inefficient. This last point ASSUMES A GERMAN BUILD OF A FIGHTER A TURN. Germany MUST switch mentalities from trying to gain ground in Asia to trading territories with USSR and defending against the Allied fleet. It is far simpler to control the Allied invasion with fighters that cost 10 and attack at 3, while the Allies are building transports that cost 8 and defend at 1, while Germany has a superior air force.