T3500b exhaust simplifier ticks (loops?) on WAY=optasm

$ make fulltest TEST="T3500b" WAY=optasm

=====> T3500b(optasm) 3767 of 4101 [0, 0, 0] 
cd ./typecheck/should_run && '/home/slyfox/dev/git/ghc-validate/inplace/bin/ghc-stage2' -fforce-recomp -dcore-lint -dcmm-lint -dno-debug-output -no-user-package-db -rtsopts -fno-ghci-history -o T3500b T3500b.hs -O -fasm   >T3500b.comp.stderr 2>&1
Compile failed (status 256) errors were:
[1 of 1] Compiling Main             ( T3500b.hs, T3500b.o )
ghc-stage2: panic! (the 'impossible' happened)
  (GHC version 7.9.20140907 for x86_64-unknown-linux):
        Simplifier ticks exhausted
    When trying RuleFired foldr/augment
    To increase the limit, use -fsimpl-tick-factor=N (default 100)
    If you need to do this, let GHC HQ know, and what factor you needed
    To see detailed counts use -ddump-simpl-stats
    Total ticks: 12441

Please report this as a GHC bug:  http://www.haskell.org/ghc/reportabug

Attempt to increase -fsimpl-tick-factor does not help copiling sample. Looks like infinite inlining pass.

The test source itself:

{-# LANGUAGE TypeFamilies, FlexibleContexts, UndecidableInstances #-}

module Main where

newtype Mu f = Mu (f (Mu f)) 
     
type family Id m
type instance Id m = m

instance Show (Id (f (Mu f))) => Show (Mu f) where
    show (Mu f) = show f

showMu :: Mu (Either ()) -> String
showMu = show

item :: Mu (Either ())
item = Mu (Right (Mu (Left ())))

main = print (showMu item)

Trac metadata

Trac field	Value
Version	7.9
Type	Bug
TypeOfFailure	OtherFailure
Priority	normal
Resolution	Unresolved
Component	Compiler
Test case	T3500b
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CC	simonpj
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