Sicilian Sunday Gravy with Meatballs and Italian Sausage

2 tablespoons olive oil
1 pound Italian sausage, cut into pieces
1 pound ground beef
1/2 cup breadcrumbs
1/4 cup grated Parmesan cheese
1/4 cup chopped fresh parsley
1 egg
Salt and pepper to taste
1 onion, chopped
4 cloves garlic, minced
2 cans (28 ounces each) crushed tomatoes
1 can (6 ounces) tomato paste
1 teaspoon dried oregano
1 teaspoon dried basil
1/2 teaspoon red pepper flakes
1 bay leaf