In a large saucepan cook meat, mushrooms, onion, carrot, green pepper, celery, and garlic until meat is brown and vegetables are tender. Drain off fat.
Stir in undrained tomatoes, tomato paste, water or wine, basil, oregano, bay leaf, salt, and pepper. Bring to boiling; reduce heat. Cover and simmer for 30 minutes, stirring occasionally. Remove bay leaf.
Combine cornstarch and 1 tablespoon cold water. Stir into sauce. Cook and stir until thickened and bubbly. Cook and stir for 2 minutes more.
Meanwhile, cook spaghetti according to package directions. Drain well. Serve sauce over spaghetti. Makes 4 servings.