Damocles Explanation With the Cicero Passage (in Latin)
Some of you have asked "What is the Sword of Damocles?" Here is an explanation of the story of the sword and the relevant passage from Cicero, in Latin. My explanation summarizes and paraphrases Cicero's Latin; however, if you want a literal translation, do a search -- translations of the passage are available online.
Dionysius (II) was a fourth century B.C. tyrant of Syracuse, a city in Magna Graecia, the Greek area of southern Italy. To all appearances Dionysius was very rich and comfortable, with all the luxuries money could buy, tasteful clothing and jewelry, and delectable food. He even had court flatterers (adsentatores) to inflate his ego. One of these ingratiators was the court sycophant, Damocles. Damocles used to make comments to the king about his wealth and luxurious life. One day when Damocles complimented the tyrant on his abundance and power, Dionysius turned to Damocles and said, "If you think I'm so lucky, how would you like to try out my life?"
Damocles readily agreed, and so Dionysius ordered everything to be prepared for Damocles to experience what life as Dionysius was like. Damocles was enjoying himself immensely... until he noticed a sharp sword hovering over his head, that was suspended from the ceiling by a horse hair. This, the tyrant explained to Damocles, was what life as ruler was really like.
Damocles, alarmed, quickly revised his idea of what made up a good life, and asked to be excused. He then eagerly returned to his poorer, but safer life.
The great, late-Republican Roman orator and statesman Cicero describes the Sword of Damocles in his Tusculan Disputations. Incidentally, The Oxford Classical Dictionary says Cicero attributes it to the wrong Dionysius (I).
Cicero: Tusculan Disputations V
XXI.  Quamquam hic quidem tyrannus ipse iudicavit, quam esset beatus. Nam cum quidam ex eius adsentatoribus, Damocles, commemoraret in sermone copias eius, opes, maiestatem dominatus, rerum abundantiam, magnificentiam aedium regiarum negaretque umquam beatiorem quemquam fuisse, 'Visne igitur' inquit, 'o Damocle, quoniam te haec vita delectat, ipse eam degustare et fortunam experiri meam?' Cum se ille cupere dixisset, conlocari iussit hominem in aureo lecto strato pulcherrimo textili stragulo, magnificis operibus picto, abacosque compluris ornavit argento auroque caelato. Tum ad mensam eximia forma pueros delectos iussit consistere eosque nutum illius intuentis diligenter ministrare.
 Aderant unguenta coronae, incendebantur odores, mensae conquisitissimis epulis extruebantur. Fortunatus sibi Damocles videbatur. In hoc medio apparatu fulgentem gladium e lacunari saeta equina aptum demitti iussit, ut impenderet illius beati cervicibus. Itaque nec pulchros illos ministratores aspiciebat nec plenum artis argentum nec manum porrigebat in mensam; iam ipsae defluebant coronae; denique exoravit tyrannum, ut abire liceret, quod iam beatus nollet esse. Satisne videtur declarasse Dionysius nihil esse ei beatum, cui semper aliqui terror impendeat? Atque ei ne integrum quidem erat, ut ad iustitiam remigraret, civibus libertatem et iura redderet; is enim se adulescens inprovida aetate inretierat erratis eaque commiserat, ut salvus esse non posset, si sanus esse coepisset.
Translations are available online.