We present a schematic model for the formation of baryonic galactic halos and hot gas in the Local Group and the intergalactic medium. We follow the dynamics, chemical evolution, heat flow and gas flows of a hierarchy of scales, including: protogalactic clouds, galactic halos, and the Local Group itself. Within this hierarchy, the Galaxy is built via mergers of protogalactic fragments. Hot and cold gas components are distinguished, with star formation occurring in cold molecular cloud cores, while stellar winds, supernovae, and mergers convert cold gas into a hot intercloud medium. We find that early bursts of star formation lead to a large population of remnants (mostly white dwarfs), which would reside presently in the halo and contribute to the dark component observed in the microlensing experiments. The hot, metal-rich gas from early starbursts and merging evaporates from the clouds and is eventually incorporated into the intergalactic medium. The model thus suggests that most microlensing objects could be white dwarfs (m ∼ 0.5M⊙), which comprise a significant fraction of the halo mass. Furthermore, the Local Group could have a component of metal-rich hot gas similar to, although less than, that observed in larger clusters. We discuss the known constraints on such a scenario and show that all local observations can be satisfied with present data in this model. The most stringent constraint comes from the metallicity distribution in the halo. The best-fit model has a halo that is 40 % baryonic, with an upper limit of 77%. Our model predicts that the hot intragroup gas has a total luminosity 1.5 × 10 40 erg s −1, and a temperature of 0.26 keV, just at the margin of detectability. Improved X-ray data could provide a key constraint on any remnant component in the halo
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