efaq: Escape sequences in shell output

 
 5.48 Why these strange escape sequences from ‘ls’ from the Shell mode?
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 In many systems, ‘ls’ is aliased to ‘ls --color’, which prints using
 ANSI color escape sequences.  Emacs version 21.1 and later includes the
 ‘ansi-color’ package, which lets Shell mode recognize these escape
 sequences.  In Emacs 23.2 and later, the package is enabled by default;
 in earlier versions you can enable it by typing ‘M-x
 ansi-color-for-comint-mode’ in the Shell buffer, or by adding ‘(add-hook
 'shell-mode-hook 'ansi-color-for-comint-mode-on)’ to your init file.