  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. 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 ($m \sim 0.5 \msol$), 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
best-fit model has a halo that is 40% baryonic, with an upper limit of 77%.
