Resolving overloading loops for circular constraint graph

[Stefan Holdermans]

Manuel, Simon,

I've spotted a hopefully small but for us quite annoying bug in GHC's  
type checker: it loops when overloading resolving involves a circular  
constraint graph containing type-family applications.

The following program (also attached) demonstrates the problem:

   {-# LANGUAGE FlexibleContexts #-}
   {-# LANGUAGE TypeFamilies     #-}

   type family F a :: *
   type instance F Int = (Int, ())

   class C a
   instance C ()
   instance (C (F a), C b) => C (a, b)

   f :: C (F a) => a -> Int
   f _ = 2

   main :: IO ()
   main = print (f (3 :: Int))

My guess is that the loop is caused by the constraint C (F Int) that  
arises from the use of f in main:

   C (F Int) = C (Int, ()) <= C (F Int)

Indeed, overloading can be resolved successfully by "black-holing" the  
initial constraint, but it seems like the type checker refuses to do so.

Can you confirm my findings?

I'm not sure whether this is a known defect. If it isn't, I'd be more  
than happy to issue a report.

Since this problem arises in a piece of very mission-critical code, I  
would be pleased to learn about any workarounds.

Thanks in advance,

   Stefan