Will you try this one again?

>  mysql -D mifos -u mifos -p<PASSWORD> < sql/init_mifos_password.sql

If that works, I think there may be a bug where the mifos user gets
corrupted or something. My memory is hazy, but I seem to recall having
to run this again sometimes. Might be just something that happens in a
dev environment (ie: when the database is being mucked with). Anyway,
give that a shot!

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