Hi, I am getting this error in my terminal when i execute the command above,

Deans-MacBook:depot dean$ rake db:create RAILS_ENV='development'
(in /Users/dean/src/RailsBook/depot) Couldn't create database for {"username"=>"root", "adapter"=>"mysql", "database"=>"depot_development", "host"=>"localhost", "password"=>nil}, charset: utf8, collation: utf8_unicode_ci (if you set the charset manually, make sure you have a matching collation)

In database config file i have the following:

development:
    adapter: mysql 
    database: depot_development 
    username: root
    password: 
    host: localhost        

I have the mysql gem installed and now i am unsure on what to do next. I am running snow leopard on a Macbook. Does anyone know why this error is happening? Thanks in Advance
Dean