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google app engine UnicodeEncodeError: 'ascii' codec can't encode character u'\xf6' in position 4: ordinal not in range(128)

Problem:
google app engine UnicodeEncodeError: 'ascii' codec can't encode character u'\xf6' in position 4: ordinal not in range(128)

Conditions:
Occurs when trying to see the data; e.g. through http://localhost:8080/_ah/admin/datastore

Reason:
Seems to be caused by incorect handling of utf-8

Solution (partially mention in this post): 

Paste and execute the following in the interactive console: http://localhost:8080/_ah/admin/interactive

import sys
reload(sys); sys.setdefaultencoding('utf-8')