G'day all.

On a very recently checked out copy of GHC (late last week, from
memory) I get the following panic:

  % ghc -fglasgow-exts -c Bug.hs 
  ghc-5.05: panic! (the `impossible' happened, GHC version 5.05):
        applyTys

  Please report it as a compiler bug to [EMAIL PROTECTED],
  or http://sourceforge.net/projects/ghc/.

on this code:

  module Bug where

  type M3 a = forall r. (forall b. M3' b -> (b -> M3' a) -> r) -> r

  newtype M3' a
      = M3' { mkM3' :: M3 a }

  bind :: M3 a -> (a -> M3 b) -> M3 b
  bind m k b = b (M3' m) (\a -> M3' (k a))

  observe :: M3 a -> a
  observe m
      = m (\m' k -> mkM3' m'
                (\bm k1 -> observe (bind (mkM3' bm)
                        (\a -> bind (mkM3' (k1 a)) (\a -> mkM3' (k a)))))
                )

Cheers,
Andrew Bromage
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