I got a rails project in version 2.3.8. When i tried to run rake db:create, the below error occured.
Couldn\'t create database for {\"encoding\"=>\"utf8\"
I ran into the same error. In my case, the problem was that I hadn't created the MySQL user who was specified in database.yml.
database.yml
mysql --user=root mysql grant all privileges on *.* to 'user_name_here'@'localhost' identified by 'password_here'; exit;