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This poem opens with a description of a beautiful palace that used to stand in a green valley. The speaker tells us all about the beautiful yellow banners that used to fly from the roof of the place. Heck, it even smelled good! Apparently travelers passing through the valley used to be able to see through the windows of the palace. Inside they could see "spirits" dancing to lute music around the throne of the king. (You know, that seems about right—if we had a palace, there'd definitely be a whole lot of dancing and lute playing going on.) There were also big pretty palace doors, and more spirits came flooding out of those doors, singing beautifully about how great the king was.
Sad to say, it didn't last. The palace was attacked by "evil things" that wrecked the palace. Now its beauty is just a dim memory. When travelers pass by, they see scary shapes moving in weird ways to unpleasant music. And now the spirits coming out of the front door are a "hideous throng." Apparently these spirits laugh without smiling, which we think tells you everything you need to know about how creepy the palace has become.