LIES ALL LIES!!
I tried the German Navy technique 5 times on my A&A CD-ROM. Every time I would buy a diffrent Navy and spend all of Germany's income for the first two rounds, in addition to that I wouldn't attack Russia just move all my units to the front. In conjunction with this I would use all of Germany's Luft Waffe to strafe the Allied Navy. Every time the Allies destroyed the German Baltic Navy before the third round the German Navy was sunk and the German front line was crippled due to the lack of "keeping up with the Jones's" you need on the German-Russian front.
I tried the scenario again 5 times only this time buying FTR's for the first two rounds pushing up all Germany's units to the front lines as I did before and not attacking Russia also as I did before. It was so beautiful to watch Germany's Iron Cross fill the skies wile looking down at the Allied Navy burning and drowning all at the same time.
So I'm going to have to go against the German Navy strategy and consider the German Luft Waffe strategy for fine tuning.
Reporting to you live from Berlin LT04 out.