  I review observations of the X-ray spectra of Galactic Black Hole Candidates,
and theoretical ideas as to how these can be produced. X-ray reflection should
enable different source geometries to be distinguished, but the ionisation
instability of X-ray irradiated material in hydrostatic equilibrium gives rise
to large ambiguities in interpretation. It is not currently possible to
determine whether the underlying emission mechanism in the low state is an
advective flow or magnetic reconnection above the disk, but more detailed
modelling of the ionisation instability {\it may} allow us to distinguish
between these scenarios.
