Beef Stew, Bologna Style

1 tablespoon olive oil

4 ounces sliced imported pancetta or lean bacon, cut into 1/2-inch pieces

1 medium onion, chopped (1/2 cup)

1 medium green bell pepper, chopped (1 cup)

2 cloves garlic, finely chopped

1 tablespoon chopped fresh parsley

1 cup sweet red wine or beef broth

1 tablespoon balsamic vinegar

1/4 teaspoon salt

1/4 teaspoon pepper

2 medium potatoes, cut into 1-inch pieces

1 medium carrot, thinly sliced (1/2 cup)

2 fresh or dried bay leaves