I'm not sure I'd agree with that last bit. Conquering the Soviet Union while having to guard your western areas and with SU getting support from other nations was almost impossible. Beating them while those two factors don't exist, would very much have been a possibility. Especially if you keep the "lets kill everyone" approach until you have won the war. What ended any chance of victory for Germany was starting a new war before the old one was settled, and then going full retard by declaring war on the USA. In other words, you don't need a grand alliance to beat the Soviets, what you need is not to face a grand alliance yourself.
The Soviet Union was hardly unbeatable. Conquering the entire land, yes, but knocking it out wasn't out of the question. Most of the manpower and much of the industry and resources where in the European part of the Soviet Union. Holding Siberia is nice, but there simply isn't enough in those areas to change the fortune of the war, especially when German bombers get in range of the Ural industry. Taking the entire country was never the goal in the first place. What couldn't be done, was beating the Soviets while not being able to put all of your resources into the battle. Not to mention that alienating the local population by acting even worse than the Soviets wasn't the way to go.
The Soviet Union was hardly unbeatable. Conquering the entire land, yes, but knocking it out wasn't out of the question. Most of the manpower and much of the industry and resources where in the European part of the Soviet Union. Holding Siberia is nice, but there simply isn't enough in those areas to change the fortune of the war, especially when German bombers get in range of the Ural industry. Taking the entire country was never the goal in the first place. What couldn't be done, was beating the Soviets while not being able to put all of your resources into the battle. Not to mention that alienating the local population by acting even worse than the Soviets wasn't the way to go.