Here's my DATABASE.yml

# SQLite version 3.x
#   gem install sqlite3-ruby (not necessary on OS X Leopard)
development:
  adapter: mysql
  database: events_development
  username: root
  password:
  host: localhost

# Warning: The database defined as "test" will be erased and
# re-generated from your development database when you run "rake".
# Do not set this db to the same as development or production.
test:
  adapter: mysql
  database: events_test
  username: root
  password:
  host: localhost

production:
  adapter: mysql
  database: events_production
  username: root
  password:
  host: localhost



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and my path

export PATH="/usr/local/bin:/usr/local/sbin:/usr/local/mysql/bin:$PATH"

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and my response from terminal


Last login: Sun Jun 14 13:10:16 on ttys000
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VarelaMacbook:~ Mike$ mysqlshow
+--------------------+
|     Databases      |
+--------------------+
| information_schema |
| test               |
+--------------------+
VarelaMacbook:~ Mike$ mysqladmin -uroot create events_development
mysqladmin: CREATE DATABASE failed; error: 'Can't create database 'events_development'; database exists'
VarelaMacbook:~ Mike$ mysqlshow
+--------------------+
|     Databases      |
+--------------------+
| information_schema |
| test               |
+--------------------+
VarelaMacbook:~ Mike$ which mysql
/usr/local/mysql/bin/mysql