I just realized my squid was down. The /var/log/squid/squid.out was unhelpful as were all the other logs in that dir. The only thing that pointed me to right solution was

Nov 13 10:00:28 emma (squid): The basicauthenticator helpers are crashing too rapidly, need help!
Nov 13 10:00:28 emma squid[9292]: Squid Parent: child process 9359 exited with status 1

It turns out the problem was that i added a comment after the last word of the first line, documenting what i did:

auth_param basic program /usr/lib64/squid/ncsa_auth /etc/squid/squid_passwd #use apache style pwd file instead of pam

Remember: Squid is idiotic and doesn't strip comments before parsing the line.