Cloud cuckoo land
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Cloud Cuckoo Land refers to an (unrealistically) idealistic state where everything is perfect. ("You're living in Cloud-cuckoo-land.") It hints that the person referred to is naïve, unaware of reality or deranged in holding such an optimistic belief. The reference is to the play, The Birds by the Athenian playwright Aristophanes, in which Peisetairus (which can be translated to mean "Mr. Trusting") and Euelpides (which can be translated to mean "Mr. Hopeful") with the help of Tereus, tired of the Earth and Olympus, decide to erect a perfect city between the clouds, to be named Cloud-Cuckoo-Land (Νεφελοκοκκυγία -- Nephelokokkygia).
[edit] Trivia
It is commonly thought that Margaret Thatcher famously used this phrase in the 1980s. "Anyone who thinks the ANC will form the government of South Africa is living in cloud cuckoo-land" However, it was actually a misquotation of her spokesman, Bernard Ingram.
The band Radiohead used this phrase in their track Like Spinning Plates on their June 2001 LP release Amnesiac.
Reference http://www.greenplastic.com/lyrics/likespinningplates.php