"The impact of the crisis is not being felt in one or a few countries but everywhere on the planet as a result of the globalization of the economic and financial system," Mr. Desmarais, the president and co-chief executive officer of Power Corp., said after a presentation to the Quebec Chamber of Commerce.
"I, therefore, am inclined to believe the crisis will be longer because it is the very foundation of the system that has been affected: trust."
Canada is well positioned to weather the storm thanks to important measures put in place over the last 15 years, he said: fiscal discipline, improved competitiveness and low inflation.
However, a concerted effort must be made to correct for the significant weaknesses inherent in the system, he said.
"It's not a matter of being pessimistic, but lucid and prudent, and to act accordingly. If we are lucky and the crisis is shorter than what we were braced for, then we will get out of it that much better," Mr. Desmarais said.
"This pessimism is understandable. How can one react otherwise when one sees how fast the crisis spread, the devastating impact it had on a great number of financial institutions and the failure of the risk-management systems in which everyone put their faith?"
Mr. Desmarais also called on Prime Minister Stephen Harper to move quickly on a promise to visit China soon. "I hope that this trip will happen as soon as possible so that the Chinese government realizes the importance Canadians attach to our bilateral relations," he said.
Canada has built up a privileged relationship with China over decades of hard work and must not see that link eroded, he warned.
Power Corp. has been forging partnerships in China for about 30 years and Mr. Desmarais is a keen promoter of enhanced trade and investment, playing up the importance of "constructive engagement" with China rather than lecturing them on human rights.
Mr. Harper has stated in the past that he will not overlook human rights abuses in China simply to advance commercial relations with Canada.
Mr. Desmarais said he is not criticizing Mr. Harper for not moving faster on boosting relations with China.
"I think it's very, very good" that he plans to visit, he said.
"The more [the Chinese] develop themselves, the more their economy and their democracy advance. A lot of things advance, including human rights. China has had an extraordinary evolution on the human rights front, you know, but no one talks about it."
Mr. Desmarais defended the new hire at Power Corp. - Henri-Paul Rousseau, one of the executives at the centre of a growing controversy over the troubled investment strategy at the Caisse de dépôt et placement du Québec.
"We are very happy to have Mr. Henri-Paul Rousseau join us. He is an extremely intelligent man with a fine history who understands the economy very well," Mr. Desmarais said.
"No one could have foreseen the economy today - that's for sure - at the time. At any rate, it's not up to me to judge [Mr. Rousseau's track record at the Caisse] one way or another."
Mr. Rousseau stepped down from the Caisse last year to join Power Corp., whose major holdings include Great-West Lifeco Inc. It was on Mr. Rousseau's watch that the Caisse stepped up its investments in higher-risk areas, such as the now-frozen non-bank asset-backed commercial paper (ABCP) market.
The Caisse is widely anticipated to post dismal returns for 2008 when it unveils its results later this month, perhaps the worst in its 43-year history.
The Quebec government has denied a report aired by Radio-Canada that it is contemplating firing seven of the 11 senior managers at the Caisse, some of whom were close to Mr. Rousseau.
Caisse chairman Pierre Brunet and president and CEO Fernand Perrault denied "that a plan to replace a large portion of the members of the executive committee had been prepared or was in preparation." In a statement, Mr. Brunet and Mr. Perrault said "these allegations are unfounded. They are prejudicial to the people concerned and to the institution in that they create doubt about the legitimacy of its officers and may adversely affect its business relationships."