Subprime: Deal of the century?

So far this year, the word "subprime" has taken on mostly poisonous connotations. It has wreaked havoc on some of the biggest financial institutions, such as Citigroup Inc. (NYSE: C), Merrill Lynch & Co., Inc. (NYSE: MER), and Washington Mutual, Inc. (NYSE: WM).

But somehow investors are finding ways to make moola on the stuff. For example, the hedge fund Paulson & Co has scored $3 billion by investing in credit default swaps (this is according to a piece on FinancialNews.com). Other hedge funds have also made some big hits on the trade, such as Harbinger Capital Partners, Balestra Capital, Scion Funds and Peloton Partners.

It also looks like the mighty Goldman Sachs Group, Inc. (NYSE: GS) has also gone short on subprime (this is according to a piece on Reuters.com). In fact, the firm's CEO, Lloyd Blankfein, says that there is more room to make money on the short side.

But if you listen to the Q3 earnings call for The Blackstone Group, L.P. (NYSE: BX), we hear another message; that is, there is an opportunity to make money on the long side.

Huh?

Well, this is the kind of stuff that makes markets -- and for the lucky few, some big killings.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.